Do big brands outshine small businesses and take away their chance at success? Or… do you believe their foundations leave a stage for small businesses to climb up on to?
Simply put, are they friend or foe to SMEs?
As we know, markets are mainly dominated by the major brands, as they are the ones with the huge advertising spend and budgets. This kind of coverage is impossible for small businesses to compete with.
However, consumers aren’t just making purchase decisions based on mainstream marketing anymore, or even the lower prices that the big players can often offer. Small businesses have a personalisation, flexibility and quality in comparison to their bigger competitors, and perhaps in that sense, the big player flaws are pointing out small business benefits.
In today’s Let’s Talk, we explore the opinions of small business leaders.
Heath Fitzpatrick, COO at ebroker
From a SME point of view, big brands is David versus Goliath. They are, without doubt, a foe as they cause significant issues for the rest of us to deal with. These issues include unfair marketplaces and unlevel competitive advantage which, if we’re honest, can border on monopolies and bullying. Similarly, we see David versus Goliath playing out with large supermarkets acting unfairly by squeezing smaller store brands or farmers. What we’ve seen since the Royal Commission is how hard banks will fight to cling to their power; it ran utterly unchecked for a very long time and they’re not keen to give it up easily. The general public is sick and tired of being used as a piggy bank for executive bonuses; this leaves the door wide open for disruptors offering a service that doesn’t rip customers off.
Phoebe Netto, founder of Pure Public Relations
Big brands tend to be more prominent so are often top of mind when businesses are considering who to engage for services or whose products to buy. So small and medium sized businesses need to work harder to build awareness. But what they do have on their side is a greater ability for personalisation, agility, and are known for often being hungrier for impressive results and thoughtful customer care. And these are the qualities that small and medium sized businesses need to market well in order to create preference for their business.
I’m happy to have competitors of any size if they are raising the standards of the industry as a whole. There is enough work to go around when you deliver results, and we all benefit when there is lots of high quality work being done.
Mat Cole, Head of Investible Games, Investible
There’s a lot of hype when it comes to partnerships between large corporates and startups.
Startups often focus on the potential benefits – the opportunity to access the large customer bases and data sets, engagement with industry expertise and the resources at scale that corporates can provide. But all too often, and with shared “blame”, the reality is these collaborations fall short of expectations – with few outcomes for corporates or founders.
The systems and processes that enable big brands to be so successful at their core business rarely suit the needs of fast-growing startups. Typically, corporate due diligence is much longer and compliance standards and operating timelines misaligned. Additionally, investing in startups is a higher-risk strategy that runs counter to the short-term horizons of most corporates, especially considering the most successful early-stage investment firms work on 7 to 9-year timelines.
Many corporate investors focus solely on startups that fit neatly into their vertical, which limits their chance of catching an opportunity or biases the way the see an investment – for instance, GM missed investing in Uber at a low seven-figure valuation.
The system works better for both sides when corporates focus on building diverse early-stage portfolios with companies sourced from a large, quality investment network, and with expert early-stage investors or former entrepreneurs making the investments and more realistic expectations on when to expect returns.
Chris Ball, SVP & Head of Partnerships, BlueChilli
Startups and corporates can absolutely be friends.
At venture builder BlueChilli, we’ve created a process for startups and corporates to unlock value through collaboration. Having built 130+ startups with corporate partners including Google for Startups, ANZ, Stockland and Coca-Cola Amatil, we’ve gotten pretty good at it.
From my experience at BlueChilli and in my own businesses, three key ingredients are critical for successful partnerships.
- Clarity. Sounds simple, but it’s often absent. For startup founder and corporate executive alike, you must have clarity for what you need and what you offer the other party.
- Shared values and vision.If not aligned, you’re doomed to fail. If you’re aligned, you have a strong foundation for success.
- Complimentary capabilities. This is at the heart of strategic value exchange. What do you uniquely offer the other party which is of massive value?
Alex Zaccario, Co-Founder and Director of Linktree
Since the outset, we’ve been incredibly fortunate to have had extremely positive and helpful relationships with big businesses. The foundation of our company was created to solve a pain point on Instagram and our user base of 2.8 million people has grown organically, through its association with major brands (Bumble, Redbull & Qantas), celebrities (Alicia Keys, and Jamie Oliver) and events (Splendour in the Grass & Coachella) using the platform.
We’ve done our best to find a mutually beneficial ground with big businesses and brands; to ensure that they are getting the most out of our product while still staying true to the entrepreneurs, creatives and side hustlers at the other end of the user-scale. For example, we recently partnered with Amazon to launch a new integration with its influencer program that allows Linktree users to curate their own storefront on the platform and earn a commission on any products purchased by their followers — this has had positive uptake with both macro and micro Linktree influencers alike.
As a startup, we have a unique ability to listen to our users and to adapt as needed, but there are huge benefits from working alongside big business and brands and their established audiences.
Nir Gabay, Elsight Managing Director (ASX: ELS)
Big brands represent a key pillar in our strategy of partnering with best-of-breed companies with high growth prospects and a real appetite for success.
With our vision of becoming the standard benchmark for connectivity in every moving device, we will be working closely with Original Electronics Manufacturers in many of the world’s fastest growing verticals such as autonomous vehicles and automotive, ruggedised tablets, cyber security, network technology, telecommunications, broadcasting and aviation. These are market salient verticals with high value potential that we see great synergy with as we proceed to commercialise our flagship HALO offering.
Big brands have also largely contributed to the traction and milestones we have achieved to date. Since our listing, we have worked closely with large multinational organisations such as Hikvision, Alrena and Traffilog, and have attracted interest from some of the world’s largest telecommunications companies, leading suppliers, manufacturers of autonomous vehicles and multiple government departments.
Our launch of HALO later this year will also focus on larger contracts with multinational companies. These unique end-market opportunities combined with the world’s leading secure data transmission technology provides the foundation for significant value creation potential over the medium and long term as we increase our presence in the Australian market.
Albert Wong, executive director of DC Alliance
When it comes to data centre construction in Australia, big brands are the market incumbents that are faced with growing pressures following delays and rising costs. This represents an incredible opportunity for us to shake up Australia’s market for data centre construction with our plans to launch, build and own Australia’s first tier IV certified data centre in Perth.
However, big brands are also an integral part of DC Alliance’s ability to realise its ambitions for growth and success in the Australian market through strategic partnerships and commercial deals. For instance, we have developed a comprehensive Internet of Things and 5G roadmap with our core technology partners. We are also exploring future revenue opportunities with Siemens, an IoT platform provider, as well as data related services in the provision of data storage and analytics.
As 5G rolls out over the next couple of years, companies will need to start storing and generating a lot more data, so the market proposition for data centres is even more robust. Simply put, 5G will create a demand for data and data storage not yet seen in Australia, and the number of data-heavy applications such as IoT that will be unleashed will be mind-boggling — and all that data needs a home. This is why the big brands who have dominated this space for so long need to keep a watchful eye on the winds of change or risk being disrupted.