Salesforce.com. Uber. Netflix. Amazon. There are many common themes these company names evoke. For one, you’ve probably heard of them; they are brand names. They’ve generated billions of dollars in revenue and raised millions of dollars in fundraising. They are all market leaders in their respective categories. But perhaps the most interesting thing these companies share is that they were all startups at one point, unknown names who disrupted once-stable industries.
Startups have many advantages over more established companies.
Startups are not tied to legacy technology; they aren’t simply trying to improve an old clunky system, they reinvent how things are done. To borrow from Henry Ford, startups invent automobiles, not faster horses. Startups are also able to be more agile and innovative, which enables disruption. Larger companies cannot move as quickly because there is more process and scrutiny, they are limited by older technology, and there are often other competing investments to make. In this post, we’ll explore how startups have the flexibility to build the best product for a market and truly disrupt the established way of operating.
Freedom to Disrupt
More established companies often focus on improving existing products, rooted in established processes and ways of thinking. Because of this, they will only ever be able to deliver incremental change. Startups are truly disruptive because they build technology from the ground up, without being stuck in the mentality of “this is how it’s done” or “this is the product we need to improve.” With startups, customers know that they have cutting-edge technology.
Because much legacy technology was developed before Software as a Service (SaaS) was common for business software, it’s often hosted on-premise or in an ASP model. (On-premise is installed and run on computers on site at the company. ASP is a little more complicated to understand, but there’s a good explanation here. In these situations, software upgrades are a manual process, taking days for the client to switch to the next version of the software.
Startups are able to take advantage of advances in cloud technology to deploy solutions via a SaaS model. Because of the structure and efficiencies of SaaS, upgrades can be deployed quickly from the software provider, with no additional work for the customer. Customers are always sure to be on the latest and greatest version of the software, which is not the case with ASP and on-premise. SaaS is also considerably less expensive because of the economies of scale. When considering a software purchase, it’s important for companies to ask vendors questions about how the software will be deployed.
Built for a Specific Function
Startups have limited headcount and budgets, so they hyper-focus on building products that serve one industry or business function. Larger organizations compete across verticals and functions. Some larger software companies have tried to find success by taking a product for one function of the business and use it for another part of the business – even if that function has completely different requirements. This model is not good for customers, particularly those in HR who manage sensitive and complex issues. Startups can focus specifically on building solutions that address concerns for one business function, so customers know they have a best-of-breed solution.
Consumer technology is ubiquitous today. Once upon a time, the only computers people used were located in the office. Now we carry phones with major computing power everywhere we go. We have incredible experiences with technology every day. Business software that was built over 10 years ago does not meet today’s user expectations – how could it when the first iPhone hadn’t been sold yet? We weren’t building software back then with user experience in mind, and it certainly wasn’t designed with a “mobile-first” approach that many UX designers consider a best practice today.
Startups are able to take today’s best practices and rapidly implement them into how users experience the technology. They use responsive design to ensure a positive mobile experience on any device, so users can easily interact with software wherever they are.
Without the constraints of more complicated on-premise and ASP-hosted implementations, startups are able to quickly deliver powerful software to new customers. While there may be some minor configuration up front, it is a much simpler process which helps customers realize the value of their investment much sooner.
The Power of Startups
Truly visionary companies take chances on startups regularly because they know the value that startups can provide. If companies want a competitive advantage – to provide employees with leading technology and tools – they must look to the innovators. They must look to startups.
Nicole Lindenbaum is the Director of Product Marketing at PeopleDoc. She writes and speaks about HR service delivery, HR technology, digital transformation, and the future of work. With significant experience in enterprise software, Nicole has worked in both HR technology and document management software.
Nicole holds a Bachelor of Fine Arts from Syracuse University and a Master of Business Administration from Washington University in St. Louis. She lives in Brooklyn, NY.