Are you ready?
Last year Facebook acquired a small company called Instagram for $1 Billion dollars. Instagram was a small startup with only 12 people so all of them become instant millionaires. When the news was announced, several students told me: “I could build a similar company like that, the idea is simple, and the technology is easy.” This was not the first time I heard comment like that so I told them that they should understand the word “Opportunity.”
My definition of “Opportunity” is “Readiness” as ONLY when you are ready then opportunity will come. It is easy to look at somebody’s success and think that you could do it too. BUT that is wrong because somebody was ready and grabbed the opportunity but you were NOT. Basically, you are NOT ready when opportunity comes.
Thirty five years ago, when Steve Jobs created Apple computer, several of my friends bought the computer, looked inside and said that it was so simple that anyone could build it. One person said: “It is simple because Steve Jobs did not even finish college, we can design much better computer than that.” I told them: “You are all college graduates and you could do better BUT Steve is ready when opportunity come but you are not.” The same thing happened with Microsoft’s DOS few years later. MSDOS was just a simple program with few thousands line of code. Today any computer science student could write an operating system like that or even better. BUT Bill Gates was ready when IBM needed to have an operating system for its PC.
From a technical point of view, there is NO difference between Instagram, Apple Computer, Microsoft DOS and the early version of Google when these products came out. They are all simple and easy to do, from today’s perspective. The reason they worth so much money and these companies are so successful because they come out first and grabbed the opportunities when they came. The fact is all of them have nothing to do with technology BUT they are ready when the right opportunity comes.
Business people called it “First Mover Advantage” or being the first product on the market to meet a need or solve a problem. Since they are the first as there is no other competition and people must use their product. When they become familiar with it, they will NOT switch to other product, even the new product is better. This is why Steve Jobs was so successful because he always wanted to be the “first on everything”. He created the first personal computer, the first integrated MP3 player, the iPod; the first smartphone, the iPhone; and the first tablet, the iPad. He said: “Design is important but timing is everything.” Timing means be ready when the right opportunity comes.
Steve Jobs was right because within a year after the first Apple Computer came out, there were over fifty companies built similar products but none of them succeed. The same thing also happened with Microsoft when Bill Gates developed the first MSDOS, at that time there was no similar product but afterward, there were many software companies developed operating systems for other computer but none of them succeed.
Of course, Facebook has enough skilled workers to build a product similar to Instagram. But it is NOT Instagram as it is the first on the market with millions of users. Since photos are key components of Facebook and Instagram is the leader in photo in mobile, it is better for Facebook to acquire Instagram so it will have several users to add to the list of company’s customers instead of building another similar product.
Few years ago, Google had a product called Google Video for sharing video on the Internet but YouTube was the first and very popular. Even though the technical were similar, but the numbers of user were different. Technical is easy to do but getting customers is NOT so Google dropped its own Google Video and brought You Tube for $1.6 Billion dollars. In business, the key success is NOT the technical but the number of customers and users.
If you come up with a new idea and build something that nobody have and a lot of customers, the chance of bigger companies are interested in acquiring your company is very high. Today acquisition is the part of the global business, when global companies are moving to regional market, they often acquire local companies that already have a lot of users rather than build something new to compete. That is why Instagram worth $1 Billion and You Tube worth $ 1.6 Billion and your company could be next, if you are ready when the right opportunity come.
Sources
- Blogs of Prof. John Vu, Carnegie Mellon University
