How To Be a Billion-Dollar Small Business

Article by Derek Shoettle | Found on INC.COM

It’s natural to assume major players, from Salesforce to Facebook, will always have the advantage over the little guys. But even those two giants started small and had to battle larger companies on their own path–think Oracle for the former, and every single social media website (e.g. MySpace) for the latter.

Figuring out how to play ball with these larger companies can accelerate the path to growth–and one day becoming a larger industry player yourself. In understanding how these companies accomplished it, you can set yourself up for success even in markets with seemingly unassailable incumbents.

I experienced this benefit first-hand while I was CEO at Cloudant, a distributed database as a service (DBaaS) built to deliver fast-growing application data to the edge, before its acquisition by IBM. It became apparent that there is no better time than the present to be a smaller company poised for growth–especially considering the merits of supreme clarity, focus and drive that are available in smaller, better controlled environments.

In a time when the internet, ease of distribution and globalization at large has completely changed how businesses can engage their larger counterparts, small companies need to leverage their flexibility and agility to take their piece of the market.

Leveraging the Current Market

The most recent testament of the smaller advantage is the Dollar Shave Club. It was recently acquired for $1 billion by Unilever after managing to capture about eight percent of the market in its five year run from the ever-dominant Gillette. It took a simple idea–providing affordable, quality razors on-demand and at a low cost–to corner a niche market and found success. By leveraging the internet, the already existent mailing system and outsourced manufacturing and distribution, the small company saved, remained agile and effectively executed on its strategy.

Evidently, size is no longer the end-all be-all advantage. The potential for continued widespread upturning of markets across the board is there. Where once it would have taken billions of dollars to establish a distribution network, advertising, sales, etc., now small companies can launch with little capital by taking advantage of the connected and already existent infrastructure most consumers already leverage–the internet.

The Internal Benefits of Being Small

But besides the external factors that led to the Dollar Shave Club’s success and eventual acquisition, smaller businesses have often overlooked advantages internally. While lacking people, resources or particular capital, a lean operation instigates efficiency, clarity and drive.

At Cloudant, I learned quickly that our position was far more a leg up than a burden. Not only were we able to pivot and refine our features and products quickly, direction also was disseminated quickly and alignment was hardly an issue. We were able to move quickly because with one or two calls we could adjust our product road map, address needs and create a plan of action. The flexibility from an operations standpoint and execution was unparalleled.

In all, although incumbents have their obvious advantages, it does not mean such companies cannot be challenged. Smaller players have the benefits of streamlined chains of communication, increased give and take in response to markets and, ultimately, can do a great deal with already available technology like the cloud and the open source movement. If you’re in a crowded space with large players, don’t fret. Take a step back, see where you can take your lead and focus on executing. Maybe you’ll be the next Dollar Shave Club.


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