In Technology, Small Fish Almost Always Eat Big Fish

http://www.gsb.stanford.edu/insights/technology-small-fish-almost-always-eat-big-fish

by walterbell • 11 years ago

72 32 11 years ago

gsb.stanford.edu

voyou• 11 years ago

Seems rather unconvincing to frame your article on "small fish" eating "big fish" with a story about big fish IBM vs the small fish of DEC and Sun. IBM currently has (according to Google) a market capitalisation of 160 billion dollars; DEC and Sun don't exist any more.

wslh• 11 years ago

And Apple, and Microsoft, and Oracle...

I think now companies are more conscious about the innovator dilemma and they can acquire innovators before they grow and integrate or kill them into their ecosystem.

Although the innovator dilemma is real, company profits came also from support contracts, so acquiring a cheaper more innovative product will also include a big support contract.

vacri• 11 years ago

Survivor Bias? Confirmation Bias? Wilful ignorance of the 'acqui-hire'? These and more, just take your pick.

I also like how smartphone OSes are implied to be 'small fish', when both major OSes were released by giant thunder-lizard companies, both with far more 'household name' power than IBM.

jasode• 11 years ago

This post seems like a restatement of "The Innovator's Dilemma"[1] by Clayton Christensen.

A new product that serves a market that is initially small but growing is ignored by the established company. The established company is conditioned to focus on their current customers' needs instead of imagining that future customers of a product they don't currently make could be a much bigger market.

A Stanford prof like Mark Leslie would presumably be well-read and therefore be aware of Clayton Christensen's popular book. He should explicitly state where his thesis differs from, or is more refined than, The Innovator's Dilemma.

[1]https://en.wikipedia.org/wiki/The_Innovator%27s_Dilemma

tchock23• 11 years ago

That was my first thought as well. This is a blatant rip off of the theory of disruptive innovations put forth by Clayton Christensen many years ago.

louprado• 11 years ago

Or Gandhi's quote: "First they ignore you, then they laugh at you, then they fight you, then you win."

calpaterson• 11 years ago

It's such a close and direct restatement that it seems a little like plagiarism

nrao123• 11 years ago

Great stuff by Leslie. He is also the author of Sales Learning Curve, a framework to figure out when to ramp up your sales force.

Likewise, technology companies shouldn't expect to sell their 1.0 product without undergoing a learning curve around the needed feature set, the competitive response, the right type of channel and sales rep, optimal pricing, etc. And yet, nearly every business plan I have seen shifts gears directly from Development to Sales, staffed by a growing number of experienced sales reps charged to sell their regular quota of product.

The consequence of skipping the Sales Learning Curve in a business plan is all too common: the company fails to meet the plan, sales reps are fired, eventually the VP Sales is fired, and the company has to raise a highly dilutive down round of capital to stay in business.

Leslie's prescription for success and capital efficiency is a plan that includes the Sales Learning Curve. Accept that until we're out there selling, we can't know what we don't know about the selling process. The goal at this point is to maximize runway, since you can't rush science. As my erudite partner and Harvard Business School Professor Felda Hardymon likes to instruct, "run the business like a one story whorehouse" (with no fucking overhead). Hire only two or three creative, guerilla-style reps and a VP who knows how to experiment with multiple channels.

It may take 4, 7, or 10 quarters to climb the curve. Only then, when your sales force is a profit center (with two quarters where contribution exceeds twice the sales costs) is it time to flick the switch. At this point, raise lots of capital and hire as many talented reps as you can possibly find! This kind of prescriptive framework for clearly distinguishing the phases of a company is so much more actionable than the wishy-washy approach of hesitantly adding more and more sales reps over time.

http://whohastimeforthis.blogspot.in/2005/09/best-startup-ad...

https://hbr.org/2006/07/the-sales-learning-curve

higherpurpose• 11 years ago

Only if the small fish doesn't sell-out before it has a chance to become a major threat to its competitors (see Whatsapp or Instagram, for instance).

paulsutter• 11 years ago

Painfully close but wrong.

Big fish are almost always eaten by small fish. On the other hand, almost all small fish fail. It's the rare exception among small fish that bests a big fish. Stated correctly it sounds unremarkable because it is unremarkable. So much for "Leslie's Law".

His DEC/IBM comparison shows that he somehow stopped reading the tech press around 1990. Intel's decomposed platform ate them all and opened the door to Linux and open source. Intel still dominates servers, but on the client side has been bested by the system on a chip cpu designs licensed by the mobile vendors. The two big client OSs are of course rooted in open source (iOS is from OSX is from NextStep is from Mach/BSD, and of course Android is Linux).

EDIT: Lawtonfogle is absolutely right, so I removed the word "completely" and left "unremarkable". Good point. Also I think most small fish die on their own. Usually because they build the wrong product.

ectoplasm• 11 years ago

Big fish are almost always eaten by small fish. Small fish are almost always eaten by big fish. At least there's a nice symmetry to it.

rqebmm• 11 years ago

It's a fish-eat-fish world out there...

mcgwiz• 11 years ago

Eh. Small fish eat other small fish. Sometimes they mutually eat each other, to abuse the metaphor.

sukruh• 11 years ago

This reminds me of Agar.io.

smt88• 11 years ago

If small fish get eaten at all. The vast, vast majority don't. They just die.

So to rephrase what you're saying: fish that get eaten are eaten by other fish. Not quite as interesting.

Lawtonfogle• 11 years ago

While it is far less remarkable the way you put it, I wouldn't call it completely unremarkable because it still is remarkable that big fish eat big fish so rarely.

smrtinsert• 11 years ago

I don't know. I look at the rise of mobile OS's as a good example of small fish taking over.

bwy• 11 years ago

What do you mean by that? You look at Android and iOS and say small fish?

swalsh• 11 years ago

Eh, I think it's a matter of perspective. Parents don't care about the millions of sperms that died on the way to fertilize an egg. They only care about the one that made it. You're thinking about it from the perspective of the sperm. I think the authors perspective was from that of the parents.

dean• 11 years ago

Big fish are almost always eaten by small fish. On the other hand, almost all small fish fail.

I think you are missing the point. This is not a story about all the small fish out there. This is a story about how the big fish die. And I think the author got it right.

biggestbob• 11 years ago

The article never claimed that all small fish eat big. That's not at all the point of the article.

tzakrajs• 11 years ago

The author is leaving out the fact that the big fish are eating the small fish in acquisitions.

toolslive• 11 years ago

"There's always a bigger fish" (I just had to say this)

PantaloonFlames• 11 years ago

correction: In Technology, Big Fish, if they get eaten, are almost always eaten by Small Fish. Also, Small Fish almost always don't survive.

hardwaresofton• 11 years ago

Maybe I'm not thinking about it long or hard enough, but this article just seems kind of wrong.

Acquisition events are way more common than small-company-eats-big-company events. It's literally logically impossible for small fish to always eat big fish, because there would then never be any big fish to start with, all fish would work out to the same size +/- one fish.

[EDIT] - After reading some more of the article it's just the title that is linkbaity/exaggerated... I made too cursory an evaluation

dctoedt• 11 years ago

"Leslie's Law" would have just a bit more credibility if someone other than Mr. Leslie himself had bestowed the label.

In Technology, Small Fish Almost Always Eat Big Fish

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