You are the owner of a highly successful and influential business
What your company is best known for is providing a much needed service to the public
Almost everybody has used this service at least once in their lives
Some use it many times a year
Some would say their lives depend on it
Your continued success is essentially guaranteed because nobody has been able to provide the same service
It’s a complicated, R&D-intensive, and highly accurate service
Only you have been able to perfect it
You’re always at the cutting-edge due to the work of the research universities that provide supporting research
You have patented the hell out of everything
But recently, you’ve heard word of a startup that claims to be able to provide the same service at a fraction of the price
Their marketing attributes the high price of the service your company provides to a lack of competition and complacency – that is, you’re not making an effort to simplify and reduce prices because you don’t have to
Their mission is to make the service accessible and affordable to everyone through improved technology, simplified processes, and cutting edge research
Their customer base is growing, they have made strategic partnerships to grow, they have a great deal of support from the community
Investors have taken note of the tremendous market opportunity. The company now doesn’t even have to pitch VCs – they came knocking
Their media presence is picking up and more and more people are jumping on their service because of it
Wall Street is constantly asking when the company will IPO so investors can get in on the action
Experts are estimating that this company will truly transform the industry, saving hundreds of billions of dollars over ten years
Here’s the problem:
Your company is being disrupted
Those savings are coming out of your pocket
Your customers are going to save hundreds of billions of dollars over ten years
Shit. You need to do something about this
You could try to compete on price until they go out of business. You would only have to price-match in the areas they currently have market share
No – too obvious that you’re trying to bankrupt them, just like how the Robber Barons would undercut prices when competition appeared and severely overcharge when they had a monopoly. There are rules against that
You could purchase the company and redefine their business plan
Not a bad idea. A few billion dollars today to keep status quo of several hundreds coming in for ten years is well worth it
You draft a letter to the company’s owner and shoot it off, hoping for an excited response
Negative. The company does not want to sacrifice autonomy. A buyout from the disrupted company would create serious conflicts of interest
Plus, it must be built without rushing so it does not scale incorrectly and fall apart
The technology still has a long, long way to go
To them, slow and steady wins the race
Dang, you can’t buy it. Throwing money at this problem isn’t going to make it go away
What should you do? If this gets as big as expected, it will mean the end for you
Your finance advisors have informed you that cutting expenses and optimizing processes in order to compete on price will take years, but it may not be enough at the end of the day
What about developing the same technology?
Engineering says “it can be done, but we have to start from scratch. It’s fundamentally different from our service. Their service was designed with cost savings and efficiency as a top priority
“They are also 7-10 R&D years ahead of us. We could probably accomplish the same in three or four as we can allocate more resources to it, depending on if we can replicate their IP”
Three years is too long. At the rate their service is growing, you’re done no matter what you try to do
You rack your brain every day and call upon your brain trust often, trying to come up with a viable plan
Everybody is covering them and people are starting to take notice
The question on Wall Street’s mind: how are the current industry giants going to react? Could this be the end for them? Time to sell?
Could this be the end for you?
What would you do?
One early morning after a night of no sleep, you get a phone call from one of your board members
Good fucking morning Ron
“We’ve found a solution. Don’t worry about anything”
What do you mean?
“They’re not for real. I’ll explain everything later. Turn on the TV”
You flip to the national news station
A big article was just published calling into question the accuracy of your competitor’s service
It’s blowing up on every channel
Industry experts are speaking up and voicing their concerns that the startup has been publishing fraudulent statistics to sell their service and have made false, baseless claims
Apparently, they have been cheating, not going through the proper channels, telling lies
Expert opinion is that it’s really just too good to be true – it’s impossible to do what they’re doing the way they’re doing it at such a low cost
As the months go by, they keep getting slammed. Hundreds of articles are published that outline their wrongdoings
Negative sentiment soars
Eventually, nobody takes them seriously
They are forced by regulation to change the service in a way that removes their competitive advantage
They’ve become a huge laughing stock
Of course, the company doesn’t give up just like that. It responds to all the negative sentiment that it’s getting, welcoming the comparison of competing services
But nothing helps. For every rebuttal, a new expert comes forward explaining why there’s nothing there
Finally, their strategic alliances is cut short, and they cannot make sales because of it
Holy hell!
All this time you thought that you were done for, but they were just a ticking time bomb all along! It’s like that shitty movie with Tom Cruise where the aliens all die from bacterial infection after some time
All you had to do was wait!
But you knew all along in your mind that it couldn’t be done so inexpensively and quickly
You’ve been in this business too long – you know better
You knew it must have been a hoax all along
It seems that your problem has been solved, and you didn’t even have to do anything
After the whole thing settles down, you have a board celebration
You chat with Ron again about the morning he called
I couldn’t believe it myself. All this time we thought we were done for, when all along they were just a busted unicorn
Haha, yea buddy it feels great
Too bad for them though. If what they claimed was true, it would have really saved people a lot of money
Yea, the wrong people though. I’d probably join their board instead
Lol, fuck you Ron
Hahaha, I did the calculation. This board is better. Makes more. It made more sense to shut them down instead
You bastard. Wait, what?
Hm?
What do you mean?
What?
What do you mean shut down? They fucked up
…
Do you seriously think they brought themselves down just like that?
Yes? The news was all over it
You think all that messaging happened on its own? You give them too much credit
What are you talking about? Nothing we came up with had a chance, it would have taken years. It was just a matter of time before we would have been fucked
Jesus, I thought you knew. I thought someone would have told you by now, or you would have put the pieces together…
Anyway, you’re welcome
Thanks…
You got it buddy. Catch you later.
- Eliminating the competition solves many business problems
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