There’s a definite sense, depending on who you ask, that it’s nearly impossible to build a successful startup today.

Amazon, Google, Facebook, Microsoft, Apple — these five companies seem to own it all.



“The future belongs to them,” as TechCrunch writer Jon Evans put it in his recent viral piece, “After The End of the Startup Era.” They’ve built moats so great that no small team can cross them lest they get crushed (or acquired), and that means that “[t]oday’s graduates are much more likely to work for Mark Zuckerberg than follow in his footsteps.” (Sure — Facebook does have 20,000+ employees.)



But there is a whole range of companies out there that are building in the shadows of these giants.



There’s companies like Snap and Slack, who have built their own giants while courting acquisition offers from Facebook and Microsoft respectively. There are upstarts like Flex, who can offer small businesses faster shipping than Amazon, and Farmstead, who can offer faster and fresher grocery delivery. There’s Airtable, who are building a bigger, better version of Google Sheets, and Draftsend, who are doing the same for Slides.



These companies aren’t just surviving in the shadows of the tech giants — they’re thriving. The fact that there are giants around doesn’t hinder them. In many ways, building in the shadows of these giants actually gives them a huge competitive advantage.

Growing in the dark

Mushrooms aren’t the only things that grow better in the dark. You can put a potato in an unlit pantry, wait a few weeks, and you will inevitably find little sprouts popping up all over them. It’s the same way with startups.



Properly nourished, a startup can grow in the dark just as well if not better than it can in sunny, well-lit greenfield. Since most fear to tread in the dark, the startups that choose to do so can get choice access to billion-dollar markets.



At Wistia, we’ve been helping businesses make better videos for over a decade now. We started up just as YouTube was getting popular. And interestingly, while many might consider YouTube our greatest nemesis, YouTube has actually been our greatest protector — and one of our closest friends.



YouTube, for us, is not a competitor. YouTube is the boogeyman that scares away our competition. It’s a tidal wave, lifting all of our boats and carrying us higher and farther than we could’ve possibly gone on our own. YouTube:

cleared the field of competition by establishing an “unbeatable” anchor price of free

made video on the web a high-performance and commonplace thing

fueled the explosive growth of online video, and therefore, our growth as well

While these factors made online video to some an impenetrable opportunity to build a company around, they were key to our success.

YouTube set the price at free

After Google bought YouTube in 2006, they gained access to virtually unlimited capital to help grow their business. That massive scale meant that they could offer their product for the best price around — free.



You can upload unlimited videos, have unlimited bandwidth, all for 100% free. That’s pretty insane. And it’s created an objection that we’ve heard a million times now: “Why would I pay for Wistia when I can use YouTube to host my videos for free?”



Free is very, very hard to compete with. At Wistia, with the high price of video hosting and bandwidth, we weren’t able to offer a rival free plan until we’d been in business for six long years, built up a solid base of customers to grow from, and refined a reliable revenue engine. Dealing with the established price point of free has been a huge challenge for our business, but it’s also been a blessing.



Setting the price at $0 totally eradicated the competition and made video hosting look like a completely unappealing market for all potential entrants — entrepreneurs and venture capitalists alike.



We started in 2007, when barely anyone was thinking about competing with YouTube. That gave us the time and space we’ve needed to focus on building a solid business that could succeed for the long term.

YouTube defined performance baselines

Remember online video before YouTube?



The web was a mess of different, incompatible codecs. Videos were stored as Windows Media files, Quicktime files, RealMedia files, etc. Every site that wanted to show videos had to host them and code them in themselves, which was annoying and expensive.



Then YouTube came along, introduced embed codes, and let anyone who wanted to put video on their site use their player. The YouTube experience has become so ubiquitous that people take its technology for granted — it’s easy to forget that it’s really a modern technological marvel.

Me, remembering all those awesome RealPlayer update pop-ups.

This engineering marvel has made the table stakes for the video hosting industry very high. With a small team of engineers, we have to keep pace with YouTube’s legion of thousands. While that’s created some very hard work for us, we’re actually grateful to YouTube for doing the hardest work of all. They pushed the web forward and made it an amazing place for video. At Wistia, we couldn’t have pulled that off by ourselves, and trying might have led to our demise.



YouTube led the charge to use Flash, and then away from Flash towards HTML5, and they brought the major browsers along with them. The purchase and subsequent runaway success of YouTube ensured that Google was deeply invested in video. They created open standards and open source technology that benefited every company working in the space. They’ve done nothing short of transform the way people experience the internet — and as that continues, all we need to do is keep up.

YouTube grew at an unprecedented rate

YouTube came out of beta in late 2005 with a $3.5 million seed round, upgraded servers, and increased bandwidth to give the site room to grow.



Wistia’s business relies on people seeing video on the web as something viable and important, and YouTube was crucial to creating that atmosphere in the early days.



YouTube launched out of beta in 2005. By the summer of 2006, theirs was the fifth most visited site on the internet, with 20 million visitors a month. They grew at 75% per week for some points. It was one of the fastest growing websites in the history of the internet.



YouTube’s growth was hastened by a late-2005 Nike ad that became their first million-hit sensation, and the 2006 partnership deal they struck with NBC. Businesses began uploading their own videos in droves. Even small companies got in on it — more than 25 million people have now viewed this Dollar Shave Club promo.

It was around the time of YouTube’s explosive growth in mid-2006 that Brendan and I launched a little video hosting site for businesses called Wistia. We must have been insane — YouTube was taking the entire market for online video.

It didn’t quite make sense then, but looking back, we probably launched at exactly the right time.



Wistia couldn’t have made any money before YouTube showed up. Before YouTube, few businesses were privy to the benefits of online video. In transforming the market, YouTube showed everyone around the world the power and potential of this medium, both for cats and for businesses.



Being there at the start of the wide, rising tide of online video is what created the opening for Wistia. We had an opportunity to go deeper on one segment of this market and create specialized features that YouTube would never build as a broad-based platform. We produced tools to help businesses use their videos to capture leads and increase signups. We created a learning center and hired video producers to help businesses get better behind the camera. We formed a support team to answer every query that came in.



All along the way, we were bolstered by the growing interest in online video. Whenever someone saw an awesome viral video on YouTube, they’d get inspired to create a video for their own business. Then they’d find us.

Learning to love the giant

Successful companies don’t come entirely out of the sheer will and grit of the entrepreneurs who started them. The truth is that we’re all benefiting from the work of other entrepreneurs and companies — especially those in the markets that are related to our own. What looks like competition often amounts to companies working to grow the market size, so that there’s greater abundance, more wealth, and increased opportunity for everyone.



Even though everyone thought we were crazy to compete with YouTube back in 2006, we were always standing on their shoulders rather than going toe-to-toe. But by offering a more flexible and targeted product, designed just as a B2B offering rather than something for everyone on the planet, we’ve grown dramatically.



YouTube unlocked the power of online video — they allowed people to upload video from their camcorders and phones and share it with billions of people all over the world. Businesses saw this, knew they could get some use out of it, and began exploring. But while YouTube is focused on pleasing everyone, and doing so in a clean and user-friendly way, we’re just focused on making better tools for businesses using video for marketing, and this has been the key to our success — we’ve taken the power that YouTube gave businesses and make it even stronger.



Today, online video is a market worth tens of billions of dollars. While YouTube is focused on taking the lion’s share of it by disrupting the TV advertising industry, they’ve left a multi-billion dollar industry for business video hosting in their wake. It’s too small for YouTube to bother with, but this small expanding wedge of the pie is the whole reason that Wistia is thriving today.



We can prioritize features that YouTube can’t, we can invest in integrations and partnerships which don’t make business sense for them, and we can own our little corner of the online video market by helping businesses get more value from their increasing investment in video.



Just as the canopy layer of trees in a rainforest provides the shelter and protection for the understory layer to thrive, so YouTube’s growth has created the demand and space for our core market.



So, thanks YouTube. You’re alright with us.

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