The misperception of SMEs of the Big Tech bulldozer

In November 2019, the House Small Business Committee held a hearing titled “A Fair Playing Field? Investigating Big Tech’s Impact on Small Business”, where stakeholders deliberate on how big tech companies have had a huge impact on small businesses that now rely heavily on their business models.

Then-president Nydia Velazquez pointed to the market dominance held by big tech companies. In his testimonyDharmesh Mehta, Vice President of Amazon, explained how “Amazon is lowering barriers to entry for entrepreneurs, helping to make retail even more competitive, and continuing to delight customers with new innovations.”

Many tech giants often claim that they give startups and small and medium-sized enterprises (SMEs) what they basically need, such as instant access to large markets, cheap and reliable infrastructure, effective advertisements and Moreover. Notwithstanding these advantages, they also hinder the success of SMEs in many ways. Sometimes big companies buy out small ones to eradicate competition. For example, shortly after Instacart (an online grocery delivery company) partnered with Whole Foods (a supermarket chain), Amazon launched its own grocery delivery service and acquired Whole. Foods. Similarly, Google has acquired the satellite navigation application “Waze”, which was once a potential competitor to Google Maps.

In other cases, these tech giants appear to be neglecting small businesses in favor of large enterprise customers who have sufficient resources to afford the services offered by big tech. As a result, small businesses lose out on the innovative digital products and latest technologies that big tech players are offering.

Does this mean that small businesses can never realize their potential for success? Or that they are doomed to be perpetual losers in lack of resources? Not necessarily.

Big tech companies can indeed help small businesses grow significantly while saving resources.

Product-driven growth strategy

Over the past few years, technology leaders have regularly discussed product-driven growth, a go-to-market strategy where “the end-user product experience is the primary driver of growth.” Product-driven growth (PLG) strategies help founders build their brand, enable them to price based on market demand, and achieve better customer satisfaction by demonstrating greater customer contribution to development of products.

It is the PLG approach that has made the success of ‘Zoom’ and ‘Dropbox’, applications widely used during the pandemic. At the time of its founding, Zoom was anticipating competition with Microsoft, Cisco, Adobe, and other well-known companies. Success in competing with such established leaders rarely comes to SMEs. However, a well-executed PLG strategy led Zoom’s massive success. The first version was released in January 2013. By the end of the month since their launch, Zoom had 400,000 users, which later grew to 1 million users by the end of May 2013. In 2015, Zoom’s customer base reached 100 million. users. Founder and CEO Eric Yuan has invested heavily in customer-centric features such as one-to-one meetings, group video conferencing, screen sharing, the ability to record meetings and automatically transcribe and embed them to Slack and other software.

The story of Dropbox, a file hosting service, is similar to some extent. Officially launched in 2008, a product-focused approach led the brand to its early success. By April 2009, it had reached a registered user base of 1 million. In 2021, Dropbox surpassed 700 million registered users. Dropbox’s product-centric approach led the founders to design a product that made file sharing easy and accessible for end users. Additionally, the founders incorporated some features that enhanced the appeal of the product to potential users. For example, as soon as a user sends a Dropbox link to another user, the user who receives the link can open it to access shared documents without hassle.

When tech companies prioritize product-driven growth and offer fast, easy-to-use products, small businesses can access the technology they need through self-service. An increased focus on small businesses benefits the bottom line by expanding a company’s addressable market and encouraging better products.

Dedicated handling

Tech giants have developed programs dedicated to startups with the aim of supporting them in their first years of growth. This practice is of utmost importance considering the failure rate of small businesses in their formative years. According to Business Employment Dynamics from the Bureau of Labor Statisticsabout 20% of small businesses fail within the first year and 50% eventually fail within five years.

An example of such a program is “NVIDIA Inception”, a free program designed with a focus on startups. The program gives startups access to cutting-edge technology, NVIDIA experts, relationships with venture capitalists, and co-marketing support that increase their visibility and help them scale faster. The program supports all stages of a startup’s lifecycle. Under NVIDIA Inception, members benefit from the best technical tools, the latest resources, and opportunities to connect with investors. The success of this program is reflected in its vast memberships. Earlier this year, Inception surpassed 10,000 members in 110 countries.

Another equally sought-after program is “Google for Startups,” an initiative by Google to support thriving, diverse, and inclusive startup communities around the world. Under this program, Google helps startups connect with the right people, the right products, and relevant best practices that, in turn, help startups thrive and grow.

The statistics reflect the success of Google’s initiatives.

Startups have created over 100,000 jobs on Google for Startups campuses and raised $6.7 billion in 2020. The Google for Startups program has helped many startups with their projects. For example, the Google for Startups Accelerator program helped the co-founders of “Hypd”, an India-based creator-run marketplace, perfect their business idea and product form. Hypd allows content creators to create online stores that match their content.

“The Google Analytics team taught us how to understand the content creator’s journey, the key features they need from the product, and the priorities to build on. This has shaped our product,” says Akshay Bhatnagar, co- Founder, Hypd.

The tools that big tech giants provide as part of their dedicated getting started programs have a noticeable impact on SMB performance. The following infographic shows the magnitude of their impact on the performance of SMEs.

(Infographic source: Deloitte)

Innovative financing

SMEs generally have less access to capital and cash reserves, which makes it difficult for them to access advanced technologies. Big tech has come up with innovative ways to help small businesses access funds. For example, in the wake of the pandemic, Google launched an initiative called “Ad Credits for Small and Medium Businesses Google Ads”. These advertising credits could be used by SMBs to offset payments for advertisements on the Google Ads platform to attract online customers to their businesses or to provide new digital offerings.

The Information Technology Industry Council (ITI), a global technology advocate that includes some of the world’s most important technology companies like Amazon, Apple, Adobe, Google, Meta, IBM and others, introduced the “Paycheck Protection Program” for startups and small businesses. Thanks to this program, small businesses were able to obtain the necessary financing. Additionally, ITI members have developed tools to provide small businesses with software and online tutorials to more easily apply for and obtain financing.

power of the little one

In the report, “The Power of Small: Unleashing the Potential of SMEs”, the International Labor Organization (ILO) deliberates on the global prevalence of SMEs and their importance in socio-economic and environmental developments. SMBs may seem too small for large tech companies to collaborate and help build their capabilities as they would with larger enterprise customers. However, understanding their level of maturity and their specific needs in each country and in all market segments while providing solutions is essential.

“A deeper focus on small business empowers underserved and underrepresented groups, ensuring that their ideas and innovation can also become part of our socio-economic fabric,” notes Gabe Monroyproduct manager at DigitalOcean.

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