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Why Most Clones Do Not Work In Digital Business

Why Most Clones Do Not Work In Digital Business

In this piece, I explain why startups win, despite the efforts of older companies who challenge them in new areas they are pioneering. The older companies can come with money, experience and technology, but most times, they are solving problems, with the wrong incentives. Consequently, they adjust the problems to accommodate their incentives and in the process, solve an entirely different problem, resulting in loss.

This week, Google is folding Stories, a temporary video format which it cloned from Snapchat. For Snapchat, it was something pivotal to its core product, but when Google cloned it, it was for something totally different in the big world of YouTube. So, Stories failed and Google will shut it down.

You read it from me: African and specifically Nigerian startups, you can win over big brands, if you build resilience with a solid moat. Generally, your incentives are different and those are inherent advantages for you to win. 

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A bank may like to  build a web-based global payment but remember that it will not like to cannibalize the hefty fees for international transfers its Treasury department depends on. For you, web payment is the business. For the bank, protect the Treasury margin. Magically, the incentives are different resulting in uncorrelated customer experiences – and over time, the startup wins!

YouTube is pulling the plug on Stories on June 26. The temporary video format — a Snapchat clone that auto-deleted after seven days — was first introduced in 2017 under the name Reels and offered to creators with more than 10,000 followers. The format failed to catch on and lost even more traction following the rise of TikTok. YouTube says it is now focusing its efforts on its bread and butter long-form content as well as Community posts, live video and its TikTok challenger, Shorts.

My Response: “don’t engage in deep dive needed to fend off their legacy competitors” – if you check, these startups are doing well. The most valued financial institution in Nigeria is Flutterwave. Moniepoint processes more than $12 billion monthly, more than any bank. In logistics, no legacy one comes close. Across most domains, especially when digital and tech could be competitive advantages, these startups are “winning”.


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1 THOUGHT ON Why Most Clones Do Not Work In Digital Business

  1. It’s why many of those who shout change don’t make to change, it’s never easy to relinquish the old privileges of incumbency anyway. Same goes for the mantra of ‘innovate or die’, some would rather die than innovate, it takes something unusual to destroy your own cash cow.

    This gives openings for new entrants to win.

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