Matt Gornick

Apple and Competing with Piracy as a Startup

Posted in Work by mgornick on May 2, 2009

http://www.fool.com/investing/general/2009/04/30/pirates-go-for-their-next-target-apple.aspx

I read the recent article by The Motley Foot on “Pirates Go for Their
Next Target: Apple” and started to think how to apply their strategy
can be applied to startups. To summarize, the article describes how
piracy is a problem in industries such as music, movies, software, and
hardware. The music and movie industries have taken the stance of
suing everyone and everything they can. Software developers (such as
game makers and Microsoft) try to add more complex copy protection and
varieties of product registration. Oddly enough Apple is quite
different by selling software without protection as well as building
hardware that takes years of expertise to design. Because of this, I
see many different avenues for startups to apply these tactics to
their own brand (slighted to B2B software startups, but they should
apply across the board).

1. “Hard to copy”: Pirates had an immensely difficult time replicating
the latest iPod Shuffle because “[the] basic components, like
resistors and capacitors, are too tiny to even identify.” [1] As a
startup, if you’re building software to run locally on a computer
their is little one can do to protect your software. The solution
(and buzz word) is cloud computing. Amazon, Microsoft, Google all
have their own cloud resources for people to use. Running your
startup on the cloud or integrating a critical component with cloud
resources is immensely beneficial. People can’t pirate something they
can’t install (most of the time).

2. “Be Open”: Apple touched on these ideas with no protection on their
OS X packages and much of their consumer software. I would venture a
guess that they are hoping people will pirate it so people are more
inclined to purchase higher end Macs. They opened up their software
so it can become viral and ubiquitous. Startups should take the same
route. Twitter is famous for providing an open API and toolset for
developers and look where they’ve gone. Now everyone on different
platforms, devices, etc. are all using Twitter. Startups should try
to build there idea as open as possible. B2B startups should
definitely take this route as products like Salesforce.com, SAP, and
Quickbooks can always bring in feeds of data that can be of use to
them. If you allow companies to utilize the data in a way you never
thought possible, then you will have created a long-term customer (and
beta tester for new features).

3. “Customer Service”: In a B2B startups, your customers are directly
paying you for the service you provide. It is easy to see the
connection between exceptional customer service, support, and
assistance and how likely these customers will stay with your product.
(Especially in a startup) if a customer requests a feature, small
change, etc. we need to give it to them. If the feature pertains to
the industry you’re marketing then it will be immensely useful to more
of your customers that haven’t thought of it yet. For example,
building small features (possibly for a fee) for some customer and
providing them to other customers down the line. Your startup looks
like it is in tune with their customer industry and fast-paced;
whereas, you literally learned of the idea from your users. Also,
most companies fail miserably at customer service. If you can provide
an easy way to talk to a person, you’d be surprised how customers
respond.

The basic principles that Apple uses to compete with piracy, startups
should use as a template to attract more customers and keep their
competition at bay!

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