What Startups can Learn From Trillion Dollar Companies
Notable tech giants dominate Wall Street’s trillion-dollar club. Apple, Microsoft, Google, Amazon and Teslas of this world have a lot of things in common, but the most important of them is Innovation.
These tech giants are worth trillions because they innovate. They are the forerunners of innovation in their respective industries.
Lesson 1: Startup Must Innovate
Technically, it’s not compulsory for startups to innovate. They just have to find a technological solution that solves a problem or improves the already-made solutions in the market.
It’s normal to find 10, 20, or 100 startups solving the same problem in the same way. However, the biggest winners are often the ones that either;
scaled rapidly or has an efficient distribution
or the ones with the biggest marketing budget.
In that order…
To innovate is to produce something new or original”
Innovative startups are outliers, and they are known to expand limits in any industry. It’s perfectly fine to be a successful company. But for a tech startup to join the trillion-dollar club, the most important criteria is to innovate.
Tech Giants dominating the top 10 most valued companies in the world
Tesla spends an average of $2,984 per car sold on research and development (R&D)—and that is triple the amount of other traditional auto manufacturers.
Source: Visual Capitalist
How old is Tesla again? and why are they spending so much on R&D than the grandfather of the industry? - They are simply innovating.
Innovation doesn’t mean necessarily translate to revenue in the short-term
In terms of revenue, Tesla is the 11th highest earner in the auto-manufacturing industry
Caption: Largest Auto-Manufacturers By Revenue
Source: Companies Market Cap
However, Innovative companies tend to be valued higher than others because the market believes their product is superior and they can easily top other earners when they scale production or supply.
In terms of market capitalization, Tesla is ranked top in the auto-manufacturing industry
Caption: Largest Auto-Manufacturers By Revenue
Source: Companies Market Cap
Tesla is innovating the auto industry
Apple is innovating lifestyle gadgets. ( Computers, Phones, Watches, etc)
Do you get?
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Lesson 2: Sh*tty Customer Support
As a startup grows, they begin to write help base articles to solve or navigate through the most common questions or challenges customers tend to have. These support articles will prove vital for support automation, and customer onboarding.
For critical services in e-commerce, payments, hosting, health, insurance, etc. Help articles are always not enough. Customers want solutions to their problems almost immediately, especially when you charge a premium. Every other thing seems like a bottleneck to solving their problems.
Customer service is often the best way to determine company culture. How a company treats its employees often reflect on how the employees treat customers. Hence startups should treat their people right.
Support Articles + Consistent Customer Feedback + Responsive Live Chat + Call Helpline - Best
Support Articles + Email Support + Responsive Live Chat + Social Media Support
Support Articles + Email Support
You should never allow a customer query left unanswered for more than 24hrs. And LiveChat is critical for critical services.
The farther away you’re from customers, the farther away you’ll be from their reality.
Many tech giants tend to outsource customer service to agencies or countries with cheaper labour because of the manpower needed to service customers. It’s evident when you schedule a call with your Google and Facebook Ads reps at least.
After product usability, the next thing i consider is customer communications.
Customer Support should be planned the same way you plan for scale or expansion
Lesson 3: Quality Products
Trillion-dollar companies are known for their product superiority. The quality of their product or services never shrinks but improves regardless of the number of customers they acquire every year.
Look at Apple products. Look at Tesla. Look at Google. Their latest update or inventions is always better than previous editions. They never prioritized quantity over quality.
For many startups, this is NOT the case. They tend to jettison quality services as they grow. One of the biggest problems for startups as they scale is ensuring quality assurance.
Startups ships product fast, and deal with consequences later. The effect of those consequences will be felt by customers. Albeit at a different scale. A startup with 3,000 customers will face lesser criticism than a startup with 500,000 customers.
A bug that affected 5% of your 3,000 customers might be negligible but can damage your reputation if that same bug affects 5% of your customers when you grow to 500,000. Your quality assurance, operations and engineering process when you were small cannot sustain you when you become big.
Startups tend to expand vertically or horizontally with the “deal with the consequences later” ideal, even when they have little or no knowledge about the industry or have made haphazard preparations.
Trillion-dollar companies are always re-inventing their process and developing better ways to do things on a constant basis. Because they know that a mistake or an error would cost them a lot more.
The more your quality of services reduces as you grow, the farther you are from a “Trillion Dollar Company”
Lesson 4: Talents & Human Resource Problems.
Trillion-dollar companies are driven by talent, training, and good leadership.
They have a constant talent pipeline that ensures only top talent works for them. They’re also invested in training, development and structured career progression.
Startups rarely have time to invest in their people, it is easier to recruit made hands them while considering the cost to ship product fast than spend time training and developing a talent pipeline. Often time startup progression doesn’t grow in tandem with its people's capacity to lead.
Because there’s always a little plan or budget for the training, conferences scholarships, and development, startup employees might develop a huge skill gap as they grow, especially as it concerns leadership.
Does the Engineering lead when you were a 10-person startup have the capacity to continue to lead when you become a 500-person startup?
Tech talents are like “tech-chain” where the smallest startups are at the bottom of the pyramid. These talents usually upgrade by moving to a bigger startup up the tech-chain ladder, until these talents get to the top, and decide to start a company themselves. Thereby returning to the bottom of the food chain.
Except you’re already innovating and operating like tech giants in all your operations, talent retention will be low. Employees keep leaving in a 1-2 years cycle. Your talents leave you with a lot of domain expertise. By the time your new recruits understand the process perfectly, they might also be halfway out, in active search for better fulfilment or opportunities.
If you see a company with employee retention that’s greater than three years in the tech startup space, it’s either the company is operating like a trillion-dollar company already, i.e. Paystack. Or the company is harbouring mediocrity. Whichever way it is, you’ll find the answers from the company’s exploit in the market
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