Should Slack be worried about Facebook At Work? originally appeared on Quora - the knowledge sharing network where compelling questions are answered by people with unique insights.
Answer by Jason M. Lemkin, SaaStr & SaaStr Fund; CEO/co-founder of EchoSign (acquired by Adobe), on Quora:
Should Slack be worried about Facebook At Work? In general, you should be at least a little worried when a BigCo announces a competitor and commits to seriously resourcing it for more than three years.
Is that the case here? I don't know. Facebook does a lot of experiments and drops them. So do Google, Salesforce, etc. If this is core to Facebook and Zuckerberg, and it's a seven to ten year commitment, then Slack should be at least a little worried. If it isn't, they should of course follow it closely. But not worry too much, if at all.
Why?
The reason is here is how a BigCo experiment works:
- BigCo reads TechCrunch, follows trends in its space.
- Tracks Top 5-10 Up-and-Comers.
- Sees a few start to break out, decides it can "build that" and that it's important to them.
- Builds a clone.
The thing is, the clone is often excellent, if backwards-looking. It's designed to catch up to today, and they have the benefit of a clean slate and a roadmap from the start-up to copy and improve upon.
And every big company has "extra" great engineers. So they can copy and improve anything if they want to. Anything. Your start-up team is not any better than great engineers at Google, Facebook, Salesforce, Adobe, wherever. It is not.
Indeed, that's not the hard part, building it.
The hard part is Year Three.
Year 0: Track the space.
Year 1: Build clone, which may well be "better" than existing leader / player in some ways.
Year 2: Clone is re-budgeted. By month eighteen or so, it's usually clear that the Clone is going to be harder to get traction, revenue, etc. with. Still, the headcount for it is reauthorized for year two.
Year 3: Now we need another fifty engineers, and now even sales people, to staff up Clone. Those 60-100 folks instead could be put on Core Revenue Streams. Which should the SVP in charge of use her limited resources against? Hmmm. Especially if the SVP's core KPIs are hitting her Core Revenue Stream numbers.
Usually, at the end of Year Three, those resources get re-allocated to the Core Revenue Stream. Because headcount is fixed in big companies, per department, usually.
If it's core, and core to the CEO. e.g., Android at Google, then different rules can apply. The CEO can change the rules.
But if a BigCo is starting a competitor from scratch and it doesn't really start to materially impact the business by the middle of Year Three -- it usually quietly gets defunded, because the headcount is reallocated.
And in SaaS, it takes seven to ten years for it to get good.
Three usually just isn't enough.
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