Healthy paranoia for start-ups meeting with big tech giants
Start-ups fortunate enough to find product market fit need to be very, very careful when meeting with tech giants about partnerships, strategic investments, and M&A.
As we approach Amazon for prime day, I'm reminded by how ruthless this tech giant is in two ways: (1) under-pricing competition to generate sales and aggregate customer demand, and then using the volume leverage to source cheaper products (2) copying the best start-up ideas and building very, very similar products in-house.....and then pricing in a manner to put them out of business.
Within the sleep tracking + and sleep + health optimization space, Amazon launched #Halo, which looks and feels identical to the WHOOP band, one of my favorite products. Will Ahmed states Amazon had met w Whoop regarding a strategic investment years ago, learned about their plans, and launched a competing product. Starting today, Amazon offers Halo at $3.99 per month versus Whoop at $30 per month. 10x cheaper!
Chris Blumenberg and I had our own war stories with Google, who launched their on-demand transport dispatch and routing solutions a few years after we started rideOS (acquired by Gopuff).
Ultimately, only the paranoid will survive, and the best way compete is with the best version of yourself, since you can't control the actions of others. There is much to be learned from the start-ups that got beat up by the larger tech giants. There is also much to be learned from the ruthless business strategies from the tech giants.
And, there are ALWAYS opportunities to build the next legendary company to displace the existing giants of today :)