Over and over again we hear this refrain from people that, without extra protection from things like patents, startups would get crushed when big companies decide to just copy them. And yet, over and over again, when we look at the situations in real life, you see that it's a lot more difficult than people think. We discussed it recently when looking at how Netflix survived competition
from Blockbuster, Amazon and Wal-Mart, but some people felt even that wasn't a good example, because by the time those three players got into the market, Netflix really did have a huge head start (which is something of an exaggeration anyway).
However, here's yet another fascinating example, sent over by my friend Tom, concerning the iPhone/Android app RunKeeper, and how it's successfully fended off competition from a bunch of different giant sporting gear companies
, including Nike. Now, it's worth pointing out that RunKeeper (the little startup) initially got its idea for an iPhone app that tracks your exercise routine via a sensor, and then integrates that data into a web service, from Nike's famous Nike+ attachment for the iPod. Rather than using a shoe sensor, the guy who started RunKeeper decided to build it ontop of the iPhone's GPS, and make it so that it wasn't shoe specific, as Nike's was (though, to be fair, I know plenty of people who used Nike+ devices on non-Nike shoes).
RunKeeper definitely picked up a following among iPhone users. However, a year after it came out, Nike not only came out with their own version of Nike+ for the iPhone and iPod Touch... but it had done a deal with Apple to come pre-installed
on every one of those Apple devices. A bunch of people predicted that Nike was going to "kill" RunKeeper this way, and all the folks who always insist that big companies will just come in and kill any innovative startup by copying them, would be proven wrong:
But quite the contrary, Nike's arrival did nothing but help RunKeeper. Nike poured their huge marketing budget into educating people on why to run with their phone, and as a result, RunKeeper's numbers more than doubled. My blog post from this time period is here.
And flourish RunKeeper did. We gained more than 2 million iPhone users, we were named by TIME Magazine as a top 10 iPhone app of 2009, and this big, passionate, global community of runners rallied around the RunKeeper system on the social web, and at www.runkeeper.com. We also ported our solution to Android (where we are currently a featured app), enabled manual map creation on the web, and integrated with a wi-fi scale, so users could send their weight data to www.runkeeper.com as well.
Along the way, other footwear companies like New Balance tried to get in the game with the 'NB TotalFit' app, but didn't make a dent (white labeled from our 'big scary' competitor). Then, Nike's arm got twisted even further when Adidas came out with their MiCoach system in August 2010, which is a GPS-based system. Here was another running shoe company jumping into the mix with a reasonable attempt, this one without tethering users to a specific pair of shoes. And Adidas came in with full guns blazing, running TV ads, sponsoring major races/events that featured MiCoach prominently, and investing heavily in trying to unseat RunKeeper as the go-to smartphone fitness tracking platform. So, one month in, what are the results so far? As of today, Adidas is ranked #18 in iPhone health/fitness and RunKeeper is ranked #14. Not bad for this little startup from Boston with zero marketing budget . In fact, MiCoach was #61 until last week, when Walt Mossberg's column gave them a big (and arguably misinformed) plug in the WSJ.
The point of the blog post was to discuss the fact that Nike was again copying RunKeeper, and going from a shoe-based sensor to a GPS application, but RunKeeper notes that it's not that worried. Why? Because it recognizes some key and important differences:
All of you big guys jumping in with major marketing budgets, you are doing this as a brand play. We are not. You are doing this to try to ultimately sell more people your footwear/apparel. We are not. You are big and slow moving. We are not.
Fascinating stuff. In Oded Shenkar's recent book, Copycats
, there are many examples of this kind of thing. It talks about the importance of copying, but also how many companies really aren't able to copy effectively. In many cases, it's because of very different cost structures and incentives. In this case, Nike is focused on selling more apparel and the Nike offering has to work towards that end, while RunKeeper can focus on other features. Could Nike successfully overtake RunKeeper? Absolutely. But a lot of it depends on execution, and there's certainly no guarantee. As for the others who entered the market, in at least some cases, it looks like they engaged in cargo cult copying
, where they copied the superficial aspects of what they saw, but didn't truly understand the market.
And, really, this is what competition is good for. Having more players in the market try different things is good for everyone. Not only does it force everyone to keep adjusting, it also pushes them all to keep experimenting with ways to better serve customers and to leapfrog over one another. Each one of these solutions may appear similar on the surface, but there are differences, as each company tries to tweak an idea to see what works. RunKeeper's initial tweak on the Nike+ appears to have worked, but so far none of the "tweaks" on RunKeeper's success have worked all that well. But, as those other (much larger) firms continue to tweak and tweak again, it's also pushing RunKeeper to keep improving its app. That's good for everyone.
What we're seeing is, once again, plain old imitation by itself doesn't appear to work very well, but imitation, plus some element of innovation to make it better does wonders. And yet, so many people don't seem to recognize this and simply assume that the "big guys" will automatically copy and kill any new startup.