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How Scrappy Startups Are Battling Corporate Juggernauts As startups in the enterprise space deal with David-and-Goliath dynamics, they're honing their weapons to overcome the giants' advantages.

By Tx Zhuo Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.


The past few months have brought a trend of consolidation in the enterprise space.

In response to the explosive popularity of agile startups like Slack, many enterprise giants have been consolidating power and influence to keep their holds on the industry. On one end of the spectrum, companies like Red Hat and Microsoft are forming strategic partnerships to knock out impending competition on key platforms. Meanwhile, companies like Oracle have been purchasing startups in attempts to subsume their services before these smaller fish grow to take over the pond.

The true motivation of these large companies is clear. Behind these drastic moves is a concentrated effort to stem the growth of startup competition and stop the disruption of this once securely held industry.

How startups can fight back

Startups in the enterprise space are used to dealing with David-and-Goliath dynamics. Bigger, more established incumbents will always exist, and many startups aspire to grow into that role themselves.

Look at a company like Slack, which grew in two years from humble beginnings -- its founders were practically begging companies to test the platform -- to a $1 billion corporation. And it has grown even more since then.

Related: Slack Creates $80 Million VC Fund to Invest in Third-Party Developers

The key to Slack's success was its ability to tackle common problems with a clean slate and a focus on flexible, customized adaptation. As a startup working outside the enterprise juggernauts like Microsoft, the company had the freedom to create a more dynamic platform without the restrictive confines of pre-existing software.

It may be an uphill battle for startups to go head-to-head with Amazon Web Services and Microsoft -- but that doesn't mean it's impossible.

Slack started small in the already crowded enterprise messaging space and became a dominant player -- one that some people think could even upend email. The startup managed to strike a chord with employees and management that its competitors did not.

Modern products for a modern enterprise landscape

While there may be no such thing as the perfect enterprise offering, startups can take steps to ensure they remain not only competitive but also ahead of the curve.

1. Harness the cloud: While this may be unsurprising, the foundation to creating a disruptive product lies in the cloud. Any modern software worth its salt needs to harness the cloud's power to be scalable, collaborative and accessible anywhere.

Mobility is increasingly becoming a major factor when it comes to choosing an enterprise software of choice. Between integrating unique services, providing a coherent format and allowing for consistent accessibility, the cloud can assist businesses to hit all of an enterprise app's primary needs. And thanks to the cloud, scaling is no longer financially out of reach.

Related: 4 Ways SaaS Can Make Entrepreneurs More Efficient and Competitive

2. Focus on improving workflow: The most successful, disruptive applications are those that allow employees and businesses to more easily, efficiently or safely collaborate. Whether this is through uniting previously disparate services or simply handling a common problem in a better way, such as communication via Slack, lessening a common bottleneck to productivity is always a surefire win.

3. Explore new and alternatives: The ideal enterprise package works in real time, harnessing the plethora of accessible information in the world and funneling it to a variety of devices. Startups have the benefit of being able to play in uncharted waters without getting bogged down in pre-existing software or generational knowledge of how their software is "supposed" to work. By using this freedom to their advantage, newer businesses can employ newer trends with greater ease.

4. Exploit your agility: Plenty of room for improvement and innovation exists that large companies aren't set up to tackle. If a startup can create a product in these areas that is both intuitive and accessible from anywhere, then its small size and adaptability position it to potentially be a major disruption.

Related: 5 Competitive Advantages Startups Have Over Big Businesses

Disruption never dies

The David-and-Goliath dynamics of the enterprise space won't be going away any time soon. If anything, today's Davids are tomorrow's Goliaths, and the goal of any disruptive startup is to navigate the waters with the freedom and ingenuity that the juggernauts can no longer attain.

For the startup that can play to its strengths and embrace the bleeding edge of enterprise services, there will always be an opening to break through.

Tx Zhuo

Managing partner at Karlin Ventures

 TX Zhuo is a managing partner of Karlin Ventures, an L.A.-based venture capital firm that focuses on early-stage enterprise software, e-commerce, and marketplaces. Follow the company on Twitter.

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