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Superpowers or Asteroids? HubSpot gets all Asymmetric

Just read an excellent blog posting by Brian Halligan, founder and CEO at HubSpot, the leader in inbound marketing. Entitled “8 Lessons From HubSpot’s $32 Million Round with Salesforce, Google, and Sequoia”, the blog’s ostensible purpose is to act as a set of do’s and don’ts for wannabe tech entrepreneurs. It’s a very good post with lots of valuable insights from a business that has defined a new marketing service category and, putting their money where their mouth is, leveraged their own technology to grow their user base from zero to over 4,000 businesses in a mere four years. Impressive stuff.

Accolades aside, the lesson that really resonated with me was number 7, “Partner with Asteroids”. Quote:

“I had dinner a couple of weeks back with Drew Houston, founder of Dropbox.  He said that a big part of his job was navigating his spaceship through the asteroid field of potential competitors.  Part of that statement motivated me to partner with Salesforce.com and Google on this deal as they are asteroids that could blow up our spaceship or could accelerate it if we can hitch a ride.  Too early to tell if this decision is a good one, but it feels right.”

Good decision Brian. Co-opting the momentum of two SaaS juggernauts rather than going head to head with them is a great idea. There is no question that your assessment of Google and Salesforce.com as potential ‘asteroids’ who might wrest the Inbound Marketing opportunity away from HubSpot at any time is wholly accurate. Better to align your interests with theirs and, in doing so, explore opportunities to make their scale and momentum work for you.

HubSpot has learned the most important play in the Asymmetric Marketer’s book: Identify you most likely ally (or competitor) from amongst the ‘software superpowers’ and find out how to make what you do work for them, all the while quietly (formlessly) nurturing your own aspirations for market and ultimately, multi category, domination. This is a tried and tested approach that has helped propel numerous businesses from startup to multinational cross category aggregator, organizations like Microsoft, Oracle, Google and Salesforce.

HubsSpot seem to get it. I’m going to watch how their Asymmetric strategy plays out with interest. I suggest that all superpower aspirants do the same.

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Posted by on March 15, 2011 in Uncategorized

 

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Software Superpower 2.0

Facebook, the leading social networking site, reached a couple of significant milestones this week, achieving a valuation of $50Billion and toppling search juggernaut Google as the world’s most visited site. This news got me thinking, do we have a new software superpower on our hands? Does Facebook possess an asymmetric advantage in the social networking space that allows them to lock in users and lock out potential competitors (particularly the cross category players – Oracle, Google, IBM, et al)? Have they successfully co-opted the resources and momentum of a superpower  to help to catapult themselves into the stratosphere? Do they have a business model that is sufficiently sustainable to enable them to wrest strategic new markets and service categories away from lesser foes? I believe that the answer to most of these questions is a qualified yes. Let’s look at the facts:

Sustainability: Facebook has apparently generated some $2Billion in annualized revenues in less than six years and is projected to grow at a 50% clip for the foreseeable future, an unprecedented achievement. This is clearly a business with legs.

Asymmetric Advantage: While the social media phenomenon has been dismissed by some pundits as a fad driven by users who are fickle and will quickly move on to the next big thing, I am not so sure. Facebook is a place where 500Million users can easily and reliably communicate with friends, view images, remember birthdays and access up to the minute status information instantaneously. All for free! It would really take something special to make all of those folks go to the trouble of porting contacts over to another service or, worse still, ‘friending’ everyone they know all over again. Make no mistake, they are locked in. That doesn’t mean that Zuckerburg and his crew are taking it easy. They are constantly adding new services like the new messaging facility they released last month, a calculated masterstroke that will make transitioning to an alternate service even more challenging. These guys are well versed in Customer Barrier Management. Their users aren’t going anywhere.

Locked-out Competition: Facebook also appears to have enough of an asymmetric advantage to fend off much larger players. For example, Buzz, Google’s attempt at social media market co-optation was an unmitigated failure.

Superpower Sponsorship: Microsoft had the right idea when they bought one percent of Facebook. Not only have they already seen a threefold return on their investment to date but they also secured an exclusive agreement to serve ads to Facebook users, an asymmetric strike against arch rival Google. All this despite the fact that Facebook is a viable threat to Microsoft’s core OS business. I am certain the Redmondistas are well aware of the potential harm that a rival platform like Facebook might do them but the truth us they have no choice here, they have to play nice. Arguably it is Microsoft that is leveraging Facebook’s momentum not the other way around.

Category Cooptation: In another year or so Facebook will go public and speculation is rife that they will enjoy a crazy valuation, perhaps as much as $100Billion. This is going to be a business with a deep war chest. They will have plenty of resources to build out new service categories and buy out or develop around competitors with technology that impacts their strategy.

So is this a possible software superpower? Let’s recap. Facebook is a company with incredible market momentum, massive barriers to entry, a locked in user population, the sponsorship of the most significant cross category software player in existence and  (soon) billions of dollars to counter threats and develop new markets. They are truly a superpower in the making.

 
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Posted by on January 4, 2011 in Technology, Uncategorized

 

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