In the old days and by the old days I mean pre 2007 when machine learning and big data really started to take off, starting a new company or launching a new product was heavily dependent on luck. There was limited information and resources for entrepreneurs to test their ideas for market viability. Even larger more established companies with more customer insights from conversations, data collection and other formal/informal ways of understanding their target consumers were still governed by the laws of luck when launching a new business or product.
The reason luck played such a large and important role was that there was no way to get valuable, unbiased, uncorrelated information from millions of customers over prolonged periods of times. Consumers rarely know what they need, if you ask them directly they will want to sound informed and smart ultimately providing misleading (although well intentioned) answers which put the odds of commercial success roughly at 50/50.
The odds went even further against the odds of success when a startup or a company wanted to fill a niche market. The lack of data to find the niche was a problem; how do you find something that doesn't exist yet? If the company was lucky enough to stumble upon a niche that wasn't yet being served the proper way to fill the niche was even more difficult. The absence of quality data turned many companies into gamblers when companies were supposed to be risk takers. This is why "luck" has played such a large part of commercial success in business.
But today, the competitive field has changed significantly with a a key player quantifying luck in real time. Google, with a staggering 78.78% of the global search market (September 2017) has developed the ability to quantify:
- What people are searching for
- What products/services are being viewed more
- Which products/services are going further down in rankings
- What searches are yielding little if any results (niche opportunity!)
- Clear regional socio economic factors
- Short/Medium/Long Term Trends and momentum.
Granted the list of insights is much longer and more in depth than this but the point is clear. Google knows you. They probably know you better than your significant other or best friends know you. Which allows them to tailor their offerings (ads) to you unlike anyone else in the world. Sure Facebook, Amazon and some other players have immensely valuable insights into the consumer, but as of now Google is king. These insights have allowed them to eliminate the majority of the guess work in launching new products and insights. Sure they still have failures but the odds have been moved in their favor as much as possible and they have maximized their possibility of being lucky. Google simply knows more than anyone else about the market conditions, customer sentiments, which companies are weak, or which ones are coming on the radar of significance.
All entrepreneurs love to have unfair competitive advantage in any market segment. It's fair to say Google has achieved the entrepreneurial dream of any founder in their market segment (search) but they have also created the unfair and I would said dangerous capability to monitor the world (in real time) and act accordingly. Imagine this, Google handles an estimated 40,000 searches a second, 3.5 billion searches daily and 1.2 trillion searches yearly. Combine this with the insights they get from their 1 billion active Gmail users monthly and 2 billion active Android users (81.7% market share) and the scope of the combined insights becomes clear.
This is all pretty cool stuff honestly. I'm not a Google basher so if you're looking for me to complain about this fact you've come to the wrong place. However, I do think the question should be asked; how should companies effectively compete when the tables are effectively against them? There are a lot of business segments Google is not currently in and might never be in. But what about the companies who happen to find themselves in the cross-hairs of a Google project? Google has the equivalent of insider information on any company, startup or new product launch. They will know how many people are looking at it, searching for it, buying, talking about etc. and they will know it before anyone else does. They would know if they should step in and buy you or step up competition and crush you.
Before you get angry at Google, it's important to note that it's not their fault per se. Almost 80% of the worlds population voluntarily votes every year to freely give Google their data for free. Google in turn offers users a broad array of services for "free": Gmail, Drive, Docs, Sheets, YouTube and many others to encourage users to do as much of their online activities via Google. These services have a value of roughly $600-$700 a year per user. That is, for $600-$700 a year you are signing away all of your activity via Google services. Emails, searches, your physical location history, purchase habits etc. All, because you wanted to get some free photo storage and email. It's important to note that most/all internet companies collect and track this data via their desktop and cell phone apps (Facebook, Amazon, LinkedIn) so I'm not highlighting Google because they are the only one, I'm highlighting Google because they are by far the best and most dominant player.
So what is the take away? What can you do with this information? Well, there are a few things:
- You should be aware that the game of competition is changing quickly in the favor of a few larger players who are able to front run other companies in the market place because they have access to better and more reliable information.
- You are voting to weaken your startup or company advantage indirectly when you choose to use Google services to operate your personal and/or professional searches, emails, collaborations etc. You are giving all of your information for free.
- Be more aware of your personal data rights. Know what information you are sharing and with who. If you had to take control of all of your digital footprints online would you even know where to start or who has what?
- Just because Google, Facebook, Amazon and others are huge doesn't mean that's the way things have to always be. It's a conversation that I believe is worth having and it will become more important in the coming years as personally generated data value gains more awareness.
- Startups and established companies alike have to consider how they will compete on the tilted board. Artificial Intelligence/Machine Learning Startups, Augmented Reality/Virtual Reality Startups and Self Driving Startups are all prime targets to be placed in the cross-hairs of Google, Facebook and Amazon.
To wrap up. Do I think now is a good time to launch an artificial intelligence/machine learning, AR/VR or any other technology startup? Absolutely. Now is an excellent time to take the plunge and take the entrepreneurial risk. Competition is always evolving, there will always be players with out sized competitive advantages in one or numerous areas. The only way to win in business is to be informed about what can end your company. Don't be caught gambling when the big companies are taking calculated and quantified risks to dominate in the market place.
Just remember, the only way someone could fix a game is if you didn't know the game was fixed. Google and others are fixing the game by Quantifying Luck in their favor. Now you know and can change your plans accordingly.