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Are You Destined to Lose to the Frightful Five? (Thinks Out Loud 303)

Are You Destined To Lose To The Frightful Five? (Thinks Out Loud 303)

Apple and Google and Facebook and Amazon and Microsoft are known as the "Frightful Five." Why? Because, they are huge. They are gatekeepers. And, they’re relentlessly focused on gaining market share. That’s not just "frightful;" it’s downright terrifying.

Also they’re coming for your customers. Even worse, your customers want them to. Because the Frightful Five is also all about making customers happy. Most people — the ones who don’t have to compete with them — love these guys.

Given all these realities, are you completely screwed? Are you destined to lose to the Frightful Five?

Of course not. You can compete. You can connect with customers directly. And you can win.

The latest episode of Thinks Out Loud looks why you’re not destined to lose to the Frightful Five and explores what you must do to compete — and win — in a world dominated by giants.

Want to learn more? Here are the show notes for you.

Thinks Out Loud Episode 303: Are You Destined to Lose to the Frightful Five? Headlines and Show Notes

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Show Notes and Links

As always, here are the "regular" show notes, detailing links and news related to this week’s episode.

Thinks Out Loud is sponsored by SoloSegment: SoloSegment increases large-enterprise, B2B website conversion with easy-to-install software that automatically connects website visitors to the content they need to see to achieve their goals. SoloSegment does this using anonymous data and machine learning ensuring privacy compliance, addressing the many anonymous visitors, and improving the efficiency of marketing teams. Visit SoloSegment.com.

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Past Insights from Tim Peter Thinks

You might also want to check out these slides I had the pleasure of presenting recently about the key trends shaping marketing in the next year. Here are the slides for your reference:

Technical Details for Thinks Out Loud

Recorded using a Heil PR-40 Dynamic Studio Recording Mic and a Focusrite Scarlett 4i4 (3rd Gen) USB Audio Interface into Logic Pro X for the Mac.

Running time: 19m 37s

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Are You Destined to Lose to the Frightful Five? Transcript

Show Opening: Are You Destined to Lose to the Frightful Five?

Well, hello again, everyone. Welcome back to Thinks Out Loud your source for all the digital marketing expertise your business needs. My name is Tim Peter. This is episode 303 of the big show. And thank you as ever tuning in. I very, very much appreciate it. I think we have a really, really cool show for you today. This one’s going to be fun.

Apple, Peloton, and The Frightful Five in Practice

There’s, there’s an interesting news story today. So you may have seen that Apple introduced its new watches today and it introduced new iPads today and it introduced a new product called Fitness+ . And what Fitness+ allows you to do is it allows you to get guided workouts from personal trainers and things like that in your home, just using your Apple Watch and your iPad.

Pretty much the moment they introduced this, Peloton stock, you know, went nuts. It dropped a whole bunch. It finished the day up, but it fell dramatically early on. And if you don’t know Peloton, you know, they’re the folks who make a bike in your home, you know, a stationary bike that again has fitness content that allows you to get personal instruction, personal training, and the like.

So Apple very much is getting into the same game that Peloton offers. And you can understand of course, why the stock market freaked out. And I really have no opinion on the stock — or certainly no opinion that I’m gonna give you here — on the stock one way or the other of Peloton or Apple’s or anybody else’s.

Why the Frightful Five Are Set Up to Win

But it shows a perfect example of why it looks like all the time that Apple and Google and Facebook and Amazon and Microsoft are set up to win. They’re set up to be in the best possible competitive position a lot. And that has huge impact regardless of what you do. And so I’ve talked before about whether or not Google is destined to win, but maybe the right question is, are you destined to lose to the Frightful Five?

You know, I’m talking of course, about Apple and Google and Facebook and Amazon and Microsoft. Because they’re out to get you. They’re out to get between you and your customer all the time. Apple’s out to get you. Google’s out to get you. Facebook’s out to get you. Amazon’s out to get you. Microsoft’s out to get you.

It’s Not Just the Frightful Five

And it’s not just them. Uber is out to get you. And you know, if you’re in hospitality, Booking.com and Expedia. And if you’re a restaurant, DoorDash. And if you make crafts, Etsy. And you know, Airbnb. I mean, if you’re a gym or, you know, you own a gym or you’re a personal trainer, Peloton themselves are out to get you to.

It’s Not Paranoia If They’re Really Out to Get You

Now, you may be listening to this and say, nah, that’s crazy, Tim, you sound paranoid. And it would be, except for one thing. As the old quote goes, it’s not paranoia if they really are out to get you. Jeff Bezos famously said, "your margin is my opportunity." That’s how these companies have set themselves up.

Why the Frightful Five Aren’t Evil

And I want to be fair, even if they’re out to get you, they’re not evil. I don’t want to paint them as the bad guys. Now I know that sounds crazy that I just said, they’re out to get you, but they’re not evil. Well, they’re not evil because A) they’re doing what their shareholders want. They’re doing what their shareholders expect them to do. And we could have a debate about whether or not that’s evil. Except for more importantly, B) they’re doing what their customers — your customers — want.

Why Data Matters

You see, they’ve set themselves up to win from the outset. And they do that a number of different ways. First they listen relentlessly. They set themselves up to collect enormous amounts of data so that they can understand what it is that customers want.

As a for instance, let’s look at Google. Every year, people use Google to search 2 trillion times. That’s trillion with a T, not even billion with a B. 2 trillion. I know that’s too big a number. So let’s break that down, right? Let’s say instead, how many searches is that a month? Well, it’s 167 billion searches per month.

Still too much? Okay. How about 35 billion searches per week? Still too much? Okay. How about five and a half billion searches per day? Or 228 million searches per hour or 3.8 million searches per second.

Do you think Google knows what people want? Of course they do. Do you think that Amazon does? Of course they do. What’s the first thing you do when you go to Amazon, you fill in the search box. Do you think that Facebook does? Of course they do. What’s the first thing you do there, you fill in your status. Do you think that Apple does? Of course they do. They’ve got your phone and they’ve got the app store and they have all these ways to listen. Do you think that Microsoft does with Bing and with your XBox and with all these other tools?
Of course they do.

The Frigthful Five Followed a Simple Path

They’re all set up to win and they listen relentlessly and then they take that data and they use it to improve relentlessly. They’ve followed a very simple path. They created products designed to collect data. They used that data to listen and understand what customers wanted. They improved the product and improved on the amount of data they collected.

They used that data to understand what customers wanted. And so they improved the product again, and the amount of data they collected again and again, and again, lather, rinse, repeat. That’s not evil. That’s brilliant.

Now, why do they do this? Because they really are paying attention to customers. They know that customers don’t really care about you.

Customers Care About Their Own Lives, Not Yours

Customers care about what’s going on in their own lives. Again, that doesn’t make the customers bad people. They have their lives they have to deal with. And I fully recognize, I fully recognize for so many businesses right now, things are tough, right? Whatever issues you’re dealing with right now, your customers are too.

And I’m genuinely sorry — I cannot emphasize this enough — if your business is going through a difficult time right now, I am truly sorry to hear that. That is not a great situation. I am. It sucks.

It also sucks as much or worse for your customers because they’re dealing with their jobs — if they still have one. They’re helping their kids with school. And in many cases, they’re the teachers now. They’re dealing with financial concerns and emotional fears and worries about their money and their health.

And I’m not saying they don’t care about you as a human being. I’m saying that your problems don’t always come to the fore of what they’re concerned about because their problems are not trivial.

Does This Mean You’re Screwed?

That’s the reality of the world we’re living in right now.
And if you’re dealing with whatever challenges you’re dealing with, and we know that the Frightful Five and all of these other companies out there have set themselves up to win — does that mean that you’re screwed? Does that mean that you should just give up that you should just outsource your sales and marketing to people like Amazon or Apple or Google or Facebook and stop working to reach customers directly?

No. Definitely not. And there’s a few reasons why that’s so.

You’re Not Destined to Lose

First as I’ve talked about before here on the show, they make the rules. If you do that, you’re just renting space from them. You’re a tenant. They’re the landlord. And if the landlord decides to raise the rent or change the rules that can put you in a really awkward position.

Secondly, and this might be hard to get your head around at the moment, but their businesses may struggle too, which can have downstream effects on your business. You don’t want to be what a friend of mine calls a barnacle business, where all your success depends on where someone else’s boat goes. Because if their boat sinks well, you’re in deep, too.

Now, wait, you’re probably going aren’t they set up to win. Why do I have to worry about, you know, whether or not their boats sinks? Their boat’s not going to sink.

Well, maybe, maybe not.

Why Some Members of the Frightful Five Won’t Survive

Yes, they’re set up to win, but not all of the Frightful Five are going to in the long term. I’m really confident that at least one of them will be flailing, if not outright failing, within 10 years time.

I don’t know which one. I’m not going to make a prediction that it is any single one of them. Except that I’m fairly confident at least one of them will find themselves in some difficulties.
And I don’t know which one, but it always happens the same way.

For all kinds of reasons, they lose sight of the customer’s needs. Remember that’s how they got to where they are in the first place, paying attention to the customer. But something comes up that causes them to not do that and they stop listening and they stop relentlessly improving their product. You know, if you listen to an episode we did a couple of weeks back about "How we get to 2030," I mentioned the "PB&J Manifesto" that talked about what was happening at Yahoo while it was happening.

And as a blogger by the name of Brett Norquist pointed out, you know, back in 1999, this was a quote "…back in 1999. AOL had a market cap of $222 billion. Yahoo peaked at $140 billion just a year later." However, just in the last few years, Verizon paid less than $10 billion… total… for the pair of them. So clearly just because you’re big doesn’t mean you’re guaranteed you’re going to succeed.

And in this specific case, there’s new entrants gunning for the Frightful Five’s margins — just the way they’re gunning for yours.

Whether they’re startups or established players, you’ve got folks like Uber and Airbnb and Instacart and DoorDash and Oyo and Alibaba and JD.com and Tencent and ByteDance. They’re all coming. They look at the frightful five’s margins and go, "Yeah, I got to get me some of that."

So not all of the Frightful Five are going to survive, at least not in their current form. It’s unlikely. So you don’t want to get yourself a landlord and you don’t want to become a barnacle business.

How You Can Succeed

But here’s the thing: You’re not destined to lose. I guarantee it. You can follow the same basic playbook and see success for your business as well.

What do you need to do?

Customer Focus

Well again, you need to focus on your customers.

Building a digital company — building a modern company — depends on customer focus first and foremost, I’ve talked about why customer experience is queen many times. And it just keeps coming back to the fore again and again, and again. You have to listen to your customers. Now I don’t want to recap this in great detail, but you can check out past episodes about "A Digital Transformation First Step" in episode 294, or "Two Key Steps Towards Digital Transformation" in episode 295, or "Four Questions Your Business Needs to Ask Right Now" in episode 297. There’s a link to all of those in the show notes. What you do need to do is you do need to listen to your customers.

And how do you do that?

Data is the Crown Jewels

Well, you use the data that you have. You’ve heard me say many times the data is the crown jewels. You want to use that data to understand what your customer’s needs are and understand how you can improve your products and services to better meet those needs.

Focus on Privacy

Now, in addition to that, you have to respect your customer’s privacy. That’s increasingly important, and it’s also just the right thing to do. And you’re probably saying, "Wait, wait. Whoa, whoa, hold on. How can I collect customer data and respect customer privacy?"

Well, first you just have to hold both of those two points in your head at the same time that that’s the reality of the world we live in Julie Ask at Forrester Research talks about thinking like big mother, not big brother. Think about why you are collecting the data. Is it because you can? Is it because you need to? Or is it because you’re going to use it to create a better experience for your customers? And if you do that last one, that’s really where you want to live.

Second, look at tools that work without personally identifiable information. Now, full disclosure. I’m a partner in a company called SoloSegment. We focus on this, so I have a huge bias there. But I can tell you, you can personalize and create tailored experiences based on customer behaviors, without having to know who the individual is. Their behaviors will guide you to the right actions.

And there’s lots of tools out there, including SoloSegment — end of commercial — that will allow you to do that.

Keep Learning

And then third, and finally, I would encourage you to take a listen to some of the past episodes of the show. I’ve talked about this for years, about ways you can actually do the right thing for your customer and follow this same basic playbook. And they include things like, "Why Google Keeps Winning and How You Can Win Too" in episode 263. "How to Build a Digital Company" in episode 302. "How to Run Your Business As If Google Didn’t Exist" in episode 298. "Digital Gatekeepers and the Death of Organic Traffic" in episode 247.

And of course in the show notes, I’ll have a link to all of these episodes, as well as others that you want to pay attention to, as well as the guide that we’ve put together on how to get deeper into Thinks Out Loud. I know with 300 plus episodes, it can be tough to say which are the right ones to listen to. So we’ve actually put together a quick little guide to help you kind of work your way through.

Are You Destined to Lose to the Frightful Five? Conclusion

The question you need to keep coming back to, is, are you destined to lose to the Frightful Five? And the answer is no.

Can you succeed? Can you compete against these folks? The answer is absolutely yes.

The Frightful Five in some form or other is always going to be around .And if it’s not those folks, it’s going to be some of the new entrants. That’s true.

But if you pay attention to your customer, if you use what your customer tells you to make a better product and service, and that you relentlessly listen and you relentlessly improve, and you continue to do that, you put yourself in a position to build a loyal, thriving customer base who can help drive your success for years and years to come.

You can do this. They once were startups. They once were small companies. Look where they are now. They’re now "The Frightful Five." You don’t need to be the Frightful Five. You just need to be "The Winning One." And then maybe you’ll be the one who scares your competition.

Show Credits and Wrap-up

Now looking at the clock on the wall, we are out of time for this week, but I want to remind you that you can find the show notes for today’s episode, as well as an archive of all past episodes by going to TimPeter.com/podcast. Again, that’s TimPeter.com/podcast. Just look for episode 303. You can also subscribe in any of the episodes you find there to have Thinks Out Loud delivered to your favorite podcatcher every single week. You can find Thinks Out Loud on Apple Podcasts, Google Podcasts, Spotify, Stitcher Radio, Overcast, wherever fine podcasts are found.

Just do a search for Tim Peter Thinks, Tim Peter Thinks Out Loud or Thinks Out Loud. We should show up for any of those. And while you’re there, I would very much appreciate it if you could provide a positive rating or review while you’re on your favorite podcast or while you’re on your favorite podcasting service. It helps new listeners find us. It helps us show up better in their search results and it helps new listeners understand a little bit better what the show is about. It makes a big difference to me personally, it means a ton and I would really appreciate it.

Thinks Out Loud on Social Media

You can also find Thinks Out Loud on Facebook. By going to facebook.com/TimPeterAssociates. You can find me on Twitter by using the Twitter handle @tcpeter. And of course you can email me by sending an email to podcast@timpeter.com. Again, that’s podcast@timpeter.com.

Sponsor Message

I know I’ve already mentioned them once during the show, but I’d like to thank our sponsor, SoloSegment. SoloSegment uses machine learning and anonymous behavioral data to automatically connect website, visitors to the content they need to achieve their goals. They do this to protect privacy, to address the needs of your website visitors, and to improve the effectiveness and efficiency of your marketing team. You can learn more about SoloSegment by going to SoloSegment.com. Again, that’s SoloSegment.com.

Sign Off

With that. I want to say one more time, how much I appreciate you tuning in today and how much it means to me. It’s so great to talk with you every single week. And I really appreciate the fact that you choose to listen. With that, I hope you have a great rest of the week. I hope you have a wonderful weekend and I look forward to speaking with you here on Thinks Out Loud next time. Until then please be well, be safe and, as ever, take care, everybody.

Tim Peter

Tim Peter is the founder and president of Tim Peter & Associates. You can learn more about our company's strategy and digital marketing consulting services here or about Tim here.

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