How to take on Goliath

Four Weapons Startups Can Use to Fight Incumbents

You can’t build a successful startup without making some enemies.

As you grow, big incumbents will start to take notice—and they have bigger budgets, more developed products, and deeper go-to-market benches.

And yet, startups continue to dethrone the market leaders year after year.

How do they do it?

The common adage first popularized by Adam Rampell is that startups must get to distribution faster than incumbents can get to innovation.

But distribution is actually only one of four weapons that Davids can use to defeat the Goliaths in their industries.

Weapon 1: Price (and pricing strategy)

If the market leader is really expensive, startups can undercut them to gain a foothold.

Take the example of Fathom, a “AI meeting assistant.” They mirror many of the features of Gong (the big incumbent) but deliver them at a fraction of the price.

But the strategy doesn’t always require being cheaper.

A few decades ago, Salesforce dethroned incumbent Siebel by offering software in a subscription model with little upfront installation cost.

Weapon 2: Product

Many startups believe their main differentiator is a better product — and most of the time, they are wrong.

To wield this weapon well, the product must deliver a new capability that drastically improves on existing tools (a “better UX” won’t cut it).

When Figma entered the market, they added real-time collaboration to design files — while Adobe programs only allowed for single-player use.

In addition, other stakeholders could access the files through the browser without paid licenses themselves, a tactic Adobe was unlikely to adopt given their business model was predicated on signing up more users.

Weapon 3: Distribution

If startups can get their product in the hands of customers faster than the market leaders, they can carve out a slice of the market for themselves.

A wave of now-well-known companies (Loom, Slack, etc.) have used product-led growth strategies to out-distribute incumbents.

For example, Zoom allowed 40-minute calls for free, and anyone who joined a meeting would have the program automatically downloaded and installed.

This allowed the product to spread virally, while Webex relied on painfully slow top down sales to penetrate the enterprise.

Weapon 4: Segmentation

Startups using this weapon focus their efforts on a specific market segment that’s underserved by the market leader — and then do everything to make the perfect product for them.

It might be hard to imagine competing head-to-head with Calendly, but founder Bridget Harris was able to bootstrap the company to $5m ARR.

Her strategy?

Targeting on a segment of users that needed to have meeting links automatically translated into multiple different languages.

This is my favorite of the four approaches because it's by far the most accessible method to any startup.

It simply requires focus on a group of people or a specific use-case and the commitment to solving their problems better than anyone else.