Should Slack be worried about Facebook At Work?

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JASON LEMKIN

In general, you should be at least a little worried when a BigCo announces a competitor AND commits to seriously resourcing it for > 3 years.

Is that the case here? I don’t know. Facebook does a lot of experiments and drops them. So do Google, Salesforce, etc. If this is core to Facebook and Zuck, and it’s a 7–10 year commitment, then Slack should be at least a little worried. If it isn’t, they should of course follow it closely. But not worry too much, if at all.

Why?

The reason is here is how a BigCo experiment works:

  • BigCo reads TechCrunch, follows trends in its space
  • Tracks Top 5–10 Up-and-Comers
  • Sees a few start to break out, decides it can “build that” and that it’s important to them
  • Builds a clone

The thing is, the clone is often excellent, if backwards-looking. It’s designed to catch up to today, and they have the benefit of a clean slate AND a roadmap from the start-up to copy and improve upon.

And every big company has “extra” great engineers. So they can copy and improve anything if they want to. Anything. Your start-up team is NOT any better than great engineers at Google, Facebook, Salesforce, Adobe, wherever. It is NOT.

Indeed, that’s not the hard part, building it.

The hard part is Year 3.

Year 0: Track the space

Year 1: Build clone, which may well be “better” than existing leader / player in some ways.

Year 2: Clone is re-budgeted. By month 18 or so, it’s usually clear Clone is going to be harder to get traction, revenue, etc. with. Still, the headcount for it is reauthorized for year 2.

Year 3: Now we need another 50 engineers, and now even sales people, to staff up Clone. Those 60–100 folks instead could be put on Core Revenue Streams. Which should the SVP in charge of use her limited resources against? Hmmm. Especially if the SVP’s core KPIs are hitting her Core Revenue Stream numbers.

Usually, at the end of Year 3 … those resources get re-allocated to the Core Revenue Stream. Because headcount is fixed in big companies, per department, usually.

Now. If it’s core, and core to the CEO. e.g., Android at Google. Different rules can apply. The CEO can change the rules.

But if a BigCo is starting a competitor from scratch and it doesn’t really start to materially impact the business by the middle of Year 3 — it usually quietly gets defunded, because the headcount is reallocated.

And in SaaS, it takes 7–10 years for it to get good.

3 usually just isn’t enough.

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Published on October 2, 2016
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