Big corporations are at your mercy, really

[fanocks2003]

New blog post at the Startuppro blog. Big corporations at your mercy.

Find the weaknesses and sell expensively « Startuppro’s Weblog

If you want to be on the newsletter and get a free pdf report, then send me a PM.

[JScott]

As usual, good in theory, not so much in implementation...

The telecom company you plan to compete against owns the medium (the wires) and the transport (the bits that go across those wires). What makes you think that you can build a home electronics device that will work with their medium and transport if they don't want you to? (unless, of course, the laws in your country require it, and even then, you will face massive competition from those who have been doing this for decades)

If they use a public standard for broadcast (DVB, ATSC, etc) and if they don't use any encryption, you can *probably* build a digital receiver for the actual TV broadcast signal; but that doesn't mean that you can use the box to control any proprietary content, to control any server-side technologies, or to control and advanced services enabled in the bitstream.

Not trying to quash your dreams or anything, but I spent 15 years in this industry (here's my qualifications), and it's not as easy as waking up one day and saying, "I think I'll compete with the big boys today and either put them out of business or make them buy me out."

That said, let us know how it goes...

[fanocks2003]

As usual, good in theory, not so much in implementation...

The telecom company you plan to compete against owns the medium (the wires) and the transport (the bits that go across those wires). What makes you think that you can build a home electronics device that will work with their medium and transport if they don't want you to? (unless, of course, the laws in your country require it, and even then, you will face massive competition from those who have been doing this for decades)

If they use a public standard for broadcast (DVB, ATSC, etc) and if they don't use any encryption, you can *probably* build a digital receiver for the actual TV broadcast signal; but that doesn't mean that you can use the box to control any proprietary content, to control any server-side technologies, or to control and advanced services enabled in the bitstream.

Not trying to quash your dreams or anything, but I spent 15 years in this industry (here's my qualifications), and it's not as easy as waking up one day and saying, "I think I'll compete with the big boys today and either put them out of business or make them buy me out."

That said, let us know how it goes...

You don't even use their software (you can use a template of it, but you tweak it so as to make it your own) and regarding the hardware, you bypass it with a new design and also look over any patents they may have. Even Edison did this. He just built upon something old. Tweaked it a bit and a new patent on that one. Then commercialize. Patents are rather overrated. As you yourself have said: Execution is everything. In this case the marketing strategy is of highest priority. The tech stuff can always be converted to your benefit with a smart team of people and good legal.

Then, you could always debate that this is a dirty way of doing business. But then again, if you are going to beat the bigger guys or even get them interested in buying you out (for self preservational needs) then you need to play the game by their rules.

Also, let us not forget that the bigger guys have more eyes poked on them than your little company has eyes on it. The bigger guys can either start a war by getting into "sabotaging your company" mode and risk getting caught with their pants around their ankle (believe me, that would be a serious blow to their trustworthiness) or they could do the most sensible of things: Buy you out and get it over with.

After all, if you build something that is of value. That is better than what the big companies already have, then you have actually benefitted them if they buy you out. We are not really talking about a war scenario here unless they start it. The small startup does not start it. The small startup is already ready to sell out anyhow (that is the goal after all. That is the reason we start the damn thing in the first place). So no problem really exist. We want them to buy us out. If the first player is not "game" then the competition surely is. I would bet you they are.

It all comes down to spotting a weakness, exploiting it and sell it back to the slower party. And both will come out of it champs.

[mtnman]

Would you PLEASE go buy a domain name so you have a chance at putting effort into something you own? You can still use wordpress if you like that already.

I don't care if I have to set it up for you for free! Driving me nuts lol

[fanocks2003]

Would you PLEASE go buy a domain name so you have a chance at putting effort into something you own? You can still use wordpress if you like that already.

I don't care if I have to set it up for you for free! Driving me nuts lol

If you mean me, it will come. Ownership is still in the blog. Domain name can come later when there is actually any attraction to the newsletter (which is still to be shown, but I have not yet made any effort in putting marketing money into it). If there is no attraction then what should I have a domain for?

I can always rename the blog later (if there is attraction in the first place). It is not set in stone at this stage. It may just as well be called "The crazy startup project" or "Extreme startups" in the future.

But you are welcome to buy a domain name if you want. I don't mind.

[juntao65]

Well, I'm sure people here wouldn't mind checking your blog out every now and then. The best way would be to either bookmark it, or remember the domain name. Do you really want to eliminate a possible avenue for remembering you? Comon man, don't hurt us. ='(

[JScott]

You don't even use their software (you can use a template of it, but you tweak it so as to make it your own) and regarding the hardware, you bypass it with a new design and also look over any patents they may have.

Again, Fanocks, you have some great ACADEMIC ideas, but until you get out there and actually try some of these things you are suggesting, you won't realize that it's not as easy as saying, "First do this, then do that, and then wait for the huge multi-national firms to start handing you cash."

It's generally unclear from your posts whether you actually plan to do any of these things you suggest, so if you're really considering this idea, let me give some advice based on my knowledge of the industry and the players. First, I suggest you do some research into the technology (your statements above indicate that you don't really understand the technology), as building a half-decent product in this space will likely cost you millions in hardware, software and UI design. Second, do some research into the history of this market; it's been around for about 40 years, with most technology companies failing miserably because they too thought the service providers were weak.

A few examples:

Tivo -- backed by some of the biggest VCs in silicon valley -- has spent billions of dollars trying to capitalize on this business model, but has been near bankruptcy several times because they are at the mercy of the service providers (DirecTV, who dropped them, and Comcast, who is ripping them apart).

Bill Gates has spent 10 years and billions of dollars trying to own this space (with help from companies such as Alcatel, Cisco, IBM, Motorola, etc), but has failed at almost every turn because the service providers worldwide have chosen not to allow Microsoft to cater to their customers. Pretty much every telecom company in the world has had their broadcast television business threatened by MS, and most of them have just laughed and said, "I'm more powerful than you when it comes to my customers." (and they're right)

Larry Ellison tried to enter this marketplace back in the late 90's (by buying a company called Liberate Technologies), which quickly got squashed by Comcast when they tried to do exactly what you suggested (and like you suggested, Liberate had much better marketing and technology than Comcast at the time).

Every example I could come up with (and there are dozens) all lead to the same conclusion: the major service providers control the market, and if you try to gain access to their customers without their cooperation, you will lose. That's why none of the big companies I've mentioned above are even trying to take a competitive approach anymore.

Btw, most of these examples are in the US, where the telecoms are heavily regulated. In other parts of the world, large national/private owners control much of the broadcast infrastructure, making it even tougher to enter the marketplace without their cooperation.

I guess my point here is that if you can successful penetrate this market in any major country and with any major service provider, you don't really have to rely on the service provider your taking over to pay you off -- there will be multi-billion dollar companies from around the world lined up at your door to take your company off your hands for a very large sum of money.

Let us know how it goes!

[fanocks2003]

Well, I'm sure people here wouldn't mind checking your blog out every now and then. The best way would be to either bookmark it, or remember the domain name. Do you really want to eliminate a possible avenue for remembering you? Comon man, don't hurt us. ='(

Bookmark it or join the newsletter list for free and get your pdf report. PM me about joining the newsletter list. Then help me spread the word and get perks in return. That way the domain will soon be up and humming.

[fanocks2003]

Again, Fanocks, you have some great ACADEMIC ideas, but until you get out there and actually try some of these things you are suggesting, you won't realize that it's not as easy as saying, "First do this, then do that, and then wait for the huge multi-national firms to start handing you cash."

It's generally unclear from your posts whether you actually plan to do any of these things you suggest, so if you're really considering this idea, let me give some advice based on my knowledge of the industry and the players. First, I suggest you do some research into the technology (your statements above indicate that you don't really understand the technology), as building a half-decent product in this space will likely cost you millions in hardware, software and UI design. Second, do some research into the history of this market; it's been around for about 40 years, with most technology companies failing miserably because they too thought the service providers were weak.

A few examples:

Tivo -- backed by some of the biggest VCs in silicon valley -- has spent billions of dollars trying to capitalize on this business model, but has been near bankruptcy several times because they are at the mercy of the service providers (DirecTV, who dropped them, and Comcast, who is ripping them apart).

Bill Gates has spent 10 years and billions of dollars trying to own this space (with help from companies such as Alcatel, Cisco, IBM, Motorola, etc), but has failed at almost every turn because the service providers worldwide have chosen not to allow Microsoft to cater to their customers. Pretty much every telecom company in the world has had their broadcast television business threatened by MS, and most of them have just laughed and said, "I'm more powerful than you when it comes to my customers." (and they're right)

Larry Ellison tried to enter this marketplace back in the late 90's (by buying a company called Liberate Technologies), which quickly got squashed by Comcast when they tried to do exactly what you suggested (and like you suggested, Liberate had much better marketing and technology than Comcast at the time).

Every example I could come up with (and there are dozens) all lead to the same conclusion: the major service providers control the market, and if you try to gain access to their customers without their cooperation, you will lose. That's why none of the big companies I've mentioned above are even trying to take a competitive approach anymore.

Btw, most of these examples are in the US, where the telecoms are heavily regulated. In other parts of the world, large national/private owners control much of the broadcast infrastructure, making it even tougher to enter the marketplace without their cooperation.

I guess my point here is that if you can successful penetrate this market in any major country and with any major service provider, you don't really have to rely on the service provider your taking over to pay you off -- there will be multi-billion dollar companies from around the world lined up at your door to take your company off your hands for a very large sum of money.

Let us know how it goes!

Doom and gloom. I don't quite have the same take on it. And that it should cost millions in development, I don't agree with that at all. You change small features on already existing technology. You refine it. Then you find customers for it. Then you get financing for it. Of course it will cost you, but a proven concept do attract finance.

Even if I, in this particular case, is an academic/newbie still, there is still many cases found in the real world where companies do this. It is not really a "pie-in-the-sky" concept.

I don't think you read my latest response very closely. I don't at all want to control the tech space. I am not a power player and probably never will be. I don't have an inclination to be a telecom power player. I want to sell out. Why should the big guys crush me in the first place when they could equally well buy me out with ease? Are the big guys really that free of intelligence or are they so bored that they want to crush every ant that comes in their way just for the sheer fun of it? I don't believe so. It does not make sense burying a technology, or a new take on the matter, when you could equally well buy that small corporation and get a new competitive edge over the competition. I have seen Microsoft buy many small time companies just because of their new tecnology or whatever. Why didn't they just crush those small buggers?

Big corporations becomes a big threat when you do not agree to sell out. If you agree to sell out and if you are such a serious problem to them, then it does not make sense to crush and burn, maybe steal. But if they can't steal it (because of legal protection and by common sense caution) and you still are open to sell "at the right price", then why shouldn't they pay you money for a job well done?

You mentioned that big corporations don't take a competitive approach anymore. Are you serious? If they are not competitive then why do they still buy up companies to gain market shares? Why are they then still in the game to compete against other companies smaller than them? Of course they need to compete. Just because big corporations are big does not in any case reserve a place as winners forever. Someone as well read as you would know that history is full of big corporations going bust from right to left because of some small annoying companies with very low over heads and almost costless infrastructures (that is how small buggers compete as you may know, there is no other way). Please elaborate further here, I don't understand your argumentation. Fools seldom understand and you said you knew more so educate me.

[JScott]

Doom and gloom. I don't quite have the same take on it. And that it should cost millions in development, I don't agree with that at all. You change small features on already existing technology. You refine it. Then you find customers for it. Then you get financing for it. Of course it will cost you, but a proven concept do attract finance.

Again, Fanocks, your ideas are good in theory, but that doesn't mean they'll work in the real world as simply and easily as you believe...if you're so convinced that the above will work, please prove me wrong. In fact, shoot me a PM and I'm happy to provide you as much competitive intelligence and insight on the broadcast TV industry as you'd like. Then you can go out and give this a try and see if it's as easy as you think...

But unless you actually try it, please stop telling everyone how easy it is. Because that's just a naive statement that is clearly based on very simplistic understanding of the business dynamics of this market space. In general, in the real world, it's not as common as you think for big companies to buy out competitors for large sums of money; it's much more common that big companies destroy their competitors or pay them small sums of money to go away.

You use the example of Microsoft buying lots of little companies. I have an assignment for you -- for every company you can think of that MS has bought, can you name 10 (or 50?) companies in the same market segment that MS didn't buy but have since gone out of business because they couldn't compete? If you know the market spaces half decently, you should be able to. Oh, and for all the companies that MS has bought out, how many do you think were companies started by former MS employees? I think you'd be very surprised at high how the percentage is...because these types of buy-outs are (in my experience) more related to *who you know* than how much of a threat you are.

Not saying it can't be done, but certainly not anywhere near as quick and easy as you think...

You've written a lot of posts about how to easily make lots of money, how to easily buy mansions and multi-billion dollar businesses, etc. If it's so easy, why haven't you done it yet? Where is the mansion you said you were going to buy last year? Where are the billion-dollar companies that you have performed leveraged buy-outs of, or you have forced to pay you off because you're such a business threat.

Don't get me wrong, again, I'm not saying these things can't be done (they're done everyday), but when reading your posts, it's like reading a real estate guru website -- lots of *potentially* good idea without any real meat behind them.

I'd rather hear more about your *real life* experiences than about your fantasy ideas that sound like they were sound-bites from my MBA classes (but without the whole lecture for context).