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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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Formlessness

In the early nineteen eighties, technology superpower IBM decided to enter the personal computing market, despite the fact that they weren’t particularly convinced that PC’s were going to be a needle moving product category (their projections called for sales of a mere 100,000 units per year). It is probably safe to say that, at that juncture, PC manufacture was not seen as a particularily strategic undertaking for IBM! So much so, in fact, that they couldn’t be bothered to dedicate their own internal resources to the development of an operating system. They decided instead to OEM a third party system. They looked at a few companies who might have the necessary software (Digital Equipment was in the mix for awhile) and ended up choosing a small software company that had recently relocated from Albuquerque, New Mexico to Bellevue, Washington, called Microsoft.

Microsoft didn’t actually own the operating system that they pitched IBM on (it was the property of a local company, Seattle Computer Products. Microsoft effectively entered into negotiations to deliver a technology that wasn’t theirs). Once the deal was done they acquired the system and changed its name from 86 DOS to MS DOS and the Microsoft legend was born. We all know what happened next. PC’s went on to become an absolute phenomenon with annual unit sales in the tens of millions. Many companies have entered the PC market since then, but there is still only one hegemon on the OS side: Microsoft.

This is asymmetric warfare at its finest. Microsoft identified a product category that had real momentum but that was not seen as strategic by their superpower partner. They co-opted IBM’s marketing momentum to drive sales of their software through IBM’s own partner community. By the time IBM realized the PC category had legs and that the demand  for Operating Systems was substantial, it was too late. They could neither co-opt the market by developing an alternative OS (they actually developed their own product, OS2, in partnership with Microsoft, not a great idea) , nor could they acquire Microsoft which had by then become one of the fastest growing technology companies in history.  Microsoft went on to release Windows in 1985 and went public in ’86. Since then the stock has made four billionaires and 12,000 millionaires.

The question is whether this was all a stroke of good luck, serendipitous timing or a conscious act of asymmetric warfare. The answer, to my mind, is that Gates and Co. knew what they were doing from day one. Think about it: they never sold out to IBM! If this was just good fortune, why didn’t they get when the getting was good? The fact is that they knew that PC consumption was going to go nuclear and that there would ultimately be many entrants into the space that they could sell their operating system to. They knew there was a market beyond IBM, and they consciously exercised creative symbiosis (driving adoption of  IBM technology) while co-opting their momentum from within and, ultimately crushing IBM’s own offering (parasitic symbiosis). Breathtaking, isn’t it?

Aspiring Asymmetric marketers would do well to pay close attention Microsoft’s incredible discipline. Although they were knowingly working on a plan to exercise parasitic symbiosis, to build and dominate their own market, they did not breathe a word of their ambitions to anyone outside the company. Instead they were an IBM partner through and through, even helping them to develop an OS that might have put them out of business. This kind of discipline is what Benzel refers to as formlessness. The term comes from Sun-Tzu’s book ‘The Art of War’. In Sun Tzu’s world a smart warrior not only never reveals his plan of attack to his enemy he even even goes as far as to look weak to lull them into a false sense of security. Software startups that plan to build and lead a market by forging an alliance with a software superpower should strongly consider keeping their long term aspirations to themselves. They should appear in all ways to be wholly aligned with their superpower’s strategic objectives. This posture should underpin all front facing sales and marketing efforts and must be maintained right up to the point when the superpower is no longer likely to be a source of market co-optation. Then the true market leader can emerge.

Formlessness. A critical weapon in the asymmetric marketer’s arsenal.

 
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Posted by on September 29, 2010 in Technology

 

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