The story behind the world’s best companies
Why less is more
What makes companies like Facebook, Microsoft, Google great?
Ever wondered why companies like Facebook, Microsoft, Uber, Google, Amazon, etc. continue to build great products despite the challenges faced by them from beginning.
And its not like these companies always get to hire the best people or train them differently.
Early start advantage
The Technology business is a bit different than other businesses because here first the technology is created, then a few years later which can also become a few decades later, governments start imposing regulations around them.
So it means they usually have a head-start of nearly 10 years to others. New and small players have to navigate the hurdles of regulations before they can compete with these giants.
Story of Netflix beating Amazon
Let’s take the example of Amazon Prime Video and Netflix.
Most people who have watched both will tell you that Netflix is miles ahead of its competitors in terms of both the content catalogue and it’s recommendation engine while Amazon Prime for a long time had lagged in those aspects.
Truth be told Netflix realized a long time ago that OTT was the key and started innovating to make it the best experience possible for it’s customers.
Netflix started competitions like the “Netflix Prize” to improve their collaborative filtering algorithm. The aim was to predict user ratings for films, based on previous ratings without any other information about the users or films.
The Competition was eventually won by 3 researchers from AT&T Labs (the same company Alexander Graham Bell co-founded).
By keeping the competition open for everyone and not just Netflix’s employees they got everyone to participate and help them improve their algorithm for almost no charge (except the prize money).
What you Focus on gets Better, What you Ignore gets Worse
By same standards if you look at Amazon and it’s Amazon Prime Video OTT platform you’ll find that between the same time period Amazon was heavily investing in its cloud computing platform, the AWS (Amazon Web Services).
If you chase two rabbits, you will catch neither one.
— Russian proverb
The problem with being invested in multiple businesses is that though it allows for diversification, it also lowers your ability to do well in any of them.
Lean organizations move faster than Big Companies because they can make faster decisions and don’t have to deal with restrictions & regulations that come when you are operating at scale.
80/20 Rule — Pareto’s Principle
If you look at the earnings report of the top 5 companies of the world, here are some things you’ll find.
Leaving aside Microsoft, you have companies like Google, Amazon, Walmart, Coco-cola, P&G, etc who majorly get their profits (nearly 80%) from 1 or 2 major businesses.
Microsoft’s example
When people see Microsoft investing (buying/supporting) in startups like OpenAI for ChatGPT as their long-term bet, what they miss to see is that their Windows / PC business has been on a decline for the last 10 years.
They are essentially creating a new business which can support this loss in revenue from other businesses with the hope that it eventually becomes a future wealth generator for them.
Microsoft is betting everything on this new tool that could potentially earn them billions in coming years just like they did with their Microsoft Azure Cloud Service.
Facebook’s Example
If you’ve been living under a cave for the last 5 years, Facebook is no longer the place where people hangout anymore. Nowadays people have Instagram, SnapChat, WhatsApp, etc.
What people don’t see is the innate ability of Mark Zuckerberg to identifty the next Social media platform and invest heavily in it. He has a whole monopoly on all the Social Media apps that people tend to use.
Fail Early and Fail fast
The thing about companies like Google which gave them an advantage for many years was their ability to develop multiple products and test them at scale.
They would literally release products in Beta and then test to see if the customers liked it and then iterate multiple times over it until it reached it desired form.
Sometimes things didn’t turn out the way they wanted and they are pretty well known to discontinue products after having been in the market for quite a long time.
You can find this list of Google projects under https://killedbygoogle.com/ .
Conclusion
These Companies are well known for changing the landscape because they operate at a different level than everybody else.
It’s not about having the best engineers or even the best product, it is their ability to innovate and try out different things in public that makes them great.
So try this, Throw it against the wall and see what sticks.
