What if [Google] does it?

1. How core is it for [Google]?

Large organisations could in theory do all sorts of things with the vast resources they have, but they have to focus on their core customers and where the core of the value is that they generate. The more core, the more likely that they will allocate resources to expand their product or service offering.

Example:

When GenAI for image generation became a thing, all of a sudden tons of founders were playing with the idea of launching a new kind of photo editor that would work differently from traditional, point-and-click photo editors. Mere weeks later, Adobe launched Firefly, a feature in their own Photoshop editor, making it clear that launching a new standalone photo editing tool was going to be a long and hard battle versus incumbents.

I would argue that the threat of a potential new paradigm of how all photos are edited clearly made this a focus for the core product and core customer group for Photoshop. Whereas building an image editor specialised for collaboration and product design such as Sketch and then Figma could clearly happen because web design was always one of many edge cases that Photoshop catered to historically.

2. Does [Google] have an innovator's dilemma?

In some cases, launching a new product would first significantly eat into the incumbent's existing business where they have invested hundreds of millions of dollars. Even in the face of a clear threat, few companies are willing (or able) to launch a product that first eats into the margins of their existing business. (The book Innovator’s Dilemma by Clayton Christensen describes this effect in detail.)

Example:

The textbook case of the innovator’s dilemma is Kodak, who invented the digital camera but would have had to disrupt and cannibalise themselves significantly had they started to actively transition their customer base onto the digital camera. They were making a lot of their revenues and margins with the sale of films, which meant Canon and others got way ahead of them.

3. Do you build a moat if [Google] is too slow?

Large organisations can be slow to react. If you have the chance to build significant network effects, customer lock-in, etc. then that may give you the opportunity to develop an entrenched position once the large company wakes up and throws their resources into the fray. This gives you a real chance to prevail. No matter how much money the incumbent devotes to copying you, they still need time to catch up—and when they do, you will be a step ahead again.

Example:

Once Instagram started incorporating reels as a reaction to TikTok’s success, - TikTok already had significant traction and massive network effects.

On the other hand, a lot of advertising technology companies founded around 2015 that were optimising performance marketing advertising spend got eventually swallowed up by Meta and Google as they inevitably moved into that space and built it into their offerings with no reason for advertisers to stick to the separate services.

4. How much legacy does [Google] carry in this field?

There can be legacy factors that will make an incumbent particularly slow or reluctant to move into whatever you are doing. They might be stuck on an old technology stack that they would have to switch completely before offering whatever you are planning to build.

Example

Uber reacted slowly in the food delivery market and lost a lot of international markets because going into food delivery meant an entirely different paradigm of delivery thinking, how systems are built, etc… All of Uber’s DNA was built around being as fast as possible since people are not willing to wait for their ride. For food delivery, customers are willing to wait an extra 10 minutes for a better quality offering. [Check out this great interview with the Uber CEO describing this.