3 Tips for Succeeding When Your Industry is Dominated By a Monopoly
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Technology, above all things, creates monopolies. As Naval Ravikant, founder of AngelList and well-known business and life guru says, the internet turns industries into "winner-takes-it-all" games with a long tail of secondary companies trailing past each industry's number one. However, while it might be an entrepreneur’s dream come true, it is incredibly hard to become your industry's Google. And it might be just a little bit harder to survive when there's a Google in your industry.
Nevertheless, everyone loves a David vs Goliath story. In times where all-mighty tech corporations like Facebook and Amazon are making negative headlines for abusing their market positions, customers are constantly reminded that they might want to support a David instead of buying from a Goliath. This millennium-old narrative provides an opportunity to convince consumers by exceptional storytelling and branding. Here are three tips on how your business can thrive in a monopolistic industry.
1. Be flexible where they can't
In business, judo and life, the small guy has an edge that the mega-corporation doesn't: It is possible to use an adversary's weight against him.
Big businesses, by default, struggle to make moves. Notably, they struggle to make big moves that require them to change many things in a short amount of time. In physical industries where not everything is fully digitized yet, flexible offers, new production methods and creative marketing can be especially effective for differentiating your small business from the big fish.
I spoke with Michael Campbell, founder and CEO of Hip Optical, an up-and-coming prescription glasses brand, about how his company was able to stay competitive in an environment dominated by a handful of large corporations. "The vast majority of U.S. eyewear brands essentially source their glasses from a single supplier, which has led to absurd prices for consumers," he says. "In order to establish ourselves in this monopolistic industry, we had to take some risks and founded our own manufacturing lab in the U.S."
He went on to say that "this textbook make-or-buy decision reduced our costs by roughly 50 percent, allowing us to offer high-quality prescription eyewear at much lower prices than many of our competitors. Combined with a modern approach to communications and sales developed by a young and dynamic team, many consumers soon began to abandon some of the big brands in favor of us."
As you can see from Campbell's example, had Hip Optical's competitors not had such giant, robust models for mass-producing glasses, it wouldn't have thought about creating a direct-to-consumer model.
From this lesson, you can see that you, too, can outmaneuver a monopoly by moving faster, building your own infrastructure and trying new things with a lot less to lose.
2. Solve a unique problem
Monopolies create problems for customers too. Some would argue that they create more problems than they fix. Whatever your industry is, chances are that someone is not happy with their current service, feeling trapped and without options.
In this article's introduction, I mentioned Google and how you would think twice about going against it. Well, guess what? Someone already did.
DuckDuckGo is a unique solution to a problem created by a monopoly: Having noticed Google's invasion of users' privacy and its monopoly over information, DuckDuckGo decided to create a private, encrypted, trackless solution.
Similar developments are now taking place in various other online sectors. Reacting to his ban from Twitter, former President Trump recently announced that he is working on a completely new type of social network that is leveraging state-of-the-art technology to ensure freedom of speech.
By solving a unique problem — sometimes one that's caused by your competing giant — you too can solve someone's needs and make them love you. Do you know any hardcore Google fans? There aren't many, at least not anymore. But you bet you can find people who swear by DuckDuckGo.
3. Be a first mover
A hard-to-miss difference between big cities and small towns is that one can find just about any conceivable kind of people in the former, sometimes in big flocks. For example, a ranch in the middle of nowhere probably doesn't have a local Yu-Gi-Oh card fan scene, but a city with over a million people likely does.
However, thanks to the constant advancement of technology, businesses no longer depend on their geographical location to find customers. The Internet is the biggest city you can possibly conceive. Kevin Kelly's famous essay, "1000 True Fans", describes how just about any artist or entrepreneur can reach a level of comfort by finding the online tribes that are most likely to love them.
Certainly, doing business online does not count as being innovative anymore. Still, there are myriad new technologies that can help tremendously to set a business apart from its competitors.
One such technology is virtual reality. In the past two years, the VR industry has advanced significantly, mostly thanks to Oculus’ affordable yet high-tech headsets, such as the Quest 2. From virtual tours and try-outs to virtual meetings, education or even therapy, this technology has much more to offer than many might know.
A further interesting technological opportunity is blockchain technology. Besides providing the framework for cryptocurrencies, this technology offers a variety of interesting use-cases that attract big-tech skeptics like bees to honey. From blockchain-based file storage, to smart-contract based transactions and decentralized governance, all of these aspects can be applied to an endless variety of business models.
The bottom line
There is no single one-size-fits-all solution, but the monopoly you're facing isn't actually all that scary.
Yes, they're big. And yes, they're bad. But not everyone wants the same thing, and no one business can please everyone. Your best bet in 2021 is to do your best to represent what you truly believe in. So show up to compete, and don't flinch. Moving first, being unique and remaining flexible will lead you to customers who will catch on to your contagious passion.