I remember every day, every moment, of both my start-ups with hyper-lucidity. But a few moments especially stand out. Those times when BigCo calls you up to their fancy office, and tells you they are going to enter your space and kill you.
It happened to me twice at EchoSign. I’m not going to share the details here. You act tough as a founder, but it’s certainly somewhat intimidating. But since then, and as a F500 tech VP, I’ve been on both sides of the table. And I think I’ve learned when BigCo actually can kill you, or at least knock it out of the park — and when they can’t.
At Adobe, the EchoSign and document services team have done an incredible job, growing total ARR to $64m this past quarter and an estimated $100m+ ARR for this fiscal year. Boom!
But also, Adobe’s prior product before EchoSign in the space, while it had some nice features, never hit any revenue or any critical mass. Some of that might have been timing. But getting a big “boost” in the market inorganically, through a post-Scale acquisition of EchoSign, clearly made a difference.
So what happens if you’re in this position? If BigCo comes after you and your space?
I answered this question as best I could on Quora vis-a-vis Google Keep and Evernote. It thought it was a helpful narrative and checklist so let me update it below:
No, not unless it has serious support at the very top like Google Apps/Docs/Drive did.
Why? Google has made and will continue to make Keep a nice product. And it can kill Evernote. It absolutely can. But, it’s likely too risky for Google to kill Evernote.
Here’s what happens, usually. Probably here (maybe Keep is the exception, but statistically, this is the likely scenario):
- Google VP/SVP sees success of Evernote and similar cloud apps, says I want to be in that space too.
- Google Director and team build a clone / their own take on the space from their budget of engineers. No problem. Put a few or dozen guys on it. There are always extra guys in a BigCo — up to a point — to build new stuff.
- The Clone isn’t that hard to build since you already have a roadmap / app to copy / improve upon.
- Clone launches, is fine, maybe even very good. But it isn’t enough to “blow up” and get 10m+ users magically on its own.
- Also, there’s no natural “attach”. I.e., it doesn’t create more revenue for Adwords or enhance it automatically. Keep may add value to Android but it’s not a true attach that can scale just because it’s hooked into another big Google product.
- To get Clone, er Keep, truly up to parity is going to take 18+ months of development. At the same time, Evernote is still innovating.
- After those next 12-18 months, it takes a big team to keep it going. Evernote has 400+ employees for a reason, it turns out. And there is zero revenue and not enough users to be material to Google, even the SVP/VP’s patch of Google. And Evernote has grown a lot in those 12-18 months, added 500 features, growing its enterprise sales team (which Google Keep doesn’t have), etc.
- Annual budgeting cycle at BigCo comes up. There’s never enough headcount. What’s going to get cut back? Defunded? Engineers get redeployed at Year 2 or so to products with higher ROI. Because now, after all that — it’s too risky to keep all those resources on something that isn’t delivering sufficiently.
Such is the cycle of cool but subscale products at the BigCos.
Unless, as a BigCo with a new niche product launch:
(x) you have special support at the top (Drive, Android) — and/or
(y) you acquire something sufficiently large that it has its own momentum and leadership already (Instagram), and/or
(z) the attach really works or the app otherwise can blow up very quickly organically;
Otherwise … it’s tough to kill or maim a successful, committed, post-Initial Scale start-up.
EchoSign has been fortunate to have strong and long-term focused sponsorships; a sizeable, post-Initial Scale base to build on; and a pretty solid attach in Adobe Reader and Acrobat. The combo makes it work and has led to strong growth.
But Keep — I don’t know. I love Google. But unless Larry Page really wants Keep to win, I say Evernote has relatively little to worry about.
(Cross-posted @ saastr)