On Startups: My money’s on the little guy

July 21, 2008

People think they are smarter to purchase from big public companies with millions of customers and hundreds of products. It’s not true. Here’s why:

Misalignment of interests
Your interests are not aligned with the interests of big companies. To a big company, you are a number, but to a small company, every customer counts. Ask the CEO of a large company to take a moment to speak with a solitary paying customer, and they probably won’t make the time. Their customers are analysts, shareholders and partners. How does that align with your interests? It doesn’t.

Expert support
Since big companies often have many products to sell, they do a bad job of supporting individual products. Call a startup and you’re likely to be in touch with someone who knows more about the product than you’d ever care to know.

Innovation and continuous improvement
Small companies must innovate or die, whereas big companies are built on large complex systems and change comes slowly because change is risky. Continuous updates to a product you are using make it feel alive and exciting, and give you an edge. With stale products you risk falling behind.

Proximity to founders
I believe that successful businesses capture the spirit and value of their founders. In small companies, there is more interaction between staff, customers, founders and key leadership – this is not to be undervalued, and I’ll bet you can feel it when you interact with the business.

You are the tail that wags the dog
Do you want to have a hand in influencing the direction of the products you use? If so, buy from small companies – they are hungry for your input and they will use it to chart their course. Big companies make product decisions based on power point quadrants and value chains, whereas small companies draw on customer input and first hand experience.

Hat tip to Mark for inspiring this post.

about the author

Co-Founder & CEO, FreshBooks Mike is the co-founder and CEO of FreshBooks, the world’s #1 cloud accounting software for self-employed professionals. Built in 2003 after he accidentally saved over an invoice, Mike spent 3.5 years growing FreshBooks from his parents’ basement. Since then, over 10 million people have used FreshBooks to save time billing, and collect billions of dollars. A lover of the outdoors, Mike has been bitten so many times it’s rumored he’s the first human to have developed immunity to mosquitoes.