I had been trying to ignore this tweet since morning. I don’t come a lot on Twitter nowadays.

But this topic is very close to my heart because I literally worked for a company that used David vs Goliath marketing when they launched in Singapore. You can google this. I’ll tell the story so that you can understand what makes business strategy work beyond vanilla oh startups grind hard, how you fight against incumbents, and how you counter position and find gaps in a market.

Let’s go back to the year 2018. Uber had left south east Asia and the leading ride-hailing company there had almost become a monopoly. They decided to devalue their reward points because, of course, they were a monopoly and could do whatever they wanted. Their margins were fat. And they would have monopoly pricing power. In that time, you had that chance to come and disrupt the market.

So, TIMING matters. WHY NOW needs to be clear.   So, what do you do? You position yourself as David vs Goliath. You say, “Hey, don’t worry. We are here. We’ll support you. We’ll fight for the masses. We’ll launch a service which is just as good. But we’ll always be for the community, for the driver, for the rider.” And it was the right narrative. We were always the brand that had more love. We were not as ruthless, which you can debate whether it was right or wrong. But we were definitely the “people’s champion” kind of brand. The leadership truly cared. But over the years, we were not able to WIN (define however you want) in Southeast Asia. And we have even exited countries. That’s where the interesting part comes in about David vs Goliath, small startup vs incumbent. All of that does not matter.  What matters is the long-term strategy. What is the counter-positioning strategy? Are you making some change in business model? Do you have the right to win demand? Maybe you have the right to win supply. Maybe you are creating a new category or creating a new position around that category.

Example. Zepto coming in with 10 min delivery. Winning the quick commerce narrative initially. They owned their supply while everyone else was relying on freelancers. Heavy capex and opex model vs incumbents light weight business model.

NEW POSITIONING. MORE CONTROL OVER SUPPLY. MORE UTILISATION OF SUPPLY BECAUSE OF MORE FULL TIME WORKERS THAN FREELANCERS. HIGHER OPEX AND CAPEX, AND WHILE INCUMBENTS FIGURE OUT IF THIS WOULD EVEN WORK, YOU WOULD END UP TAKING SIGNIFICANT MARKETSHARE BY THEN.

Because sure you call yourself the David vs Goliath and you launch with the same product, same margin structure, same business model, acquire similar supply, go after the same demand, and just play on the NARRATIVE, but that does not work in the long run. 

NARRATIVE DOES NOT WORK LONG TERM.

So what should we have done differently? What Namma did. Namma came far later, but attacked the margin structure of Ola and Uber. There are companies in South Asia which have been doing the same playbook from far earlier. There’s this company which launched by saying, “We know that all the ride-hailing companies are expensive. But for the high price point they have highly reliable products. They are premium products. Your car arrive on time. You don’t have to wait longer. And the quality is high, but for that you pay a lot too.”

But it is also beyond the price point that most college students and economy-minded people can afford. Then what do you do? You go and say, “If you’re willing to wait 10-15 minutes, you can get your car, but cheaper. It will probably be priced at about 50-70% of the most reliable ride-hailing products. You just have to wait longer. Yes, the drivers might cancel sometimes, but you have to be okay with it.”

Especially in Singapore where supply is capped, and other strategies won’t work, you can seed your marketplace supply by cutting commission by a lot.

When you change business model or commission structure, you can do multiple things. The main players are at 25% commission because they want to run a highly reliable marketplace. So you say, “We have 5% commission because we are not a big company. We can afford to have lower revenue initially.” And it is almost like a vampire attack on the supply of the bigger companies. And because they can’t counter immediate to protect their margin, supply moves to you. Not enough that you get high reliability initially, but enough that people can at least get their car in 10 minutes. And you charge 50-60% of the price point.

So what happens? College students move. Economy-minded people move. And then over time, there is enough demand that organically supply also comes. It’s not just about low commission anymore.  This strategy does not work if you want uncapped marketshare and revenue.

You can’t ever get to 50% market share because a lot of people still want high reliability. They want better cars and drivers. And the established players will always play with driver incentives to ensure high reliability and prevent their best drivers from churning. Customers also want customer support. Better safety. They want  better service. More options. But then you’ll be able to capture somewhere between 20 to 30% market share in the long term. Not immediately, but long-term.

And if you see Namma and Rapido in India, of course, their GTV will be same as Ola Uber because AOV is same. But their revenue will be far lower because of the commission structure. Now Uber can’t ever operate this model because they can’t reduce their revenue. They can’t kill their margin. They are a public company. They move slow. They have to report their earnings and for a public company, you can’t show margin/ revenue decline. You want to show your take rate has actually increased because of your platform play.

Yes, Rapido could win in Bike transport.Swiggy could not even operate in that market because as a leader in food delivery you can’t enter regulatory grey areas like Bike transport. You will attract attention of regulators and safety issues would have impacted their IPO plan.

Once the infra for Bike transport is ready, you can use the same allocation logic, pricing systems, playbook to acquire drivers when you expand horizontally to car and auto.

But the real reason Rapido grew was because they had a differentiated BUSINESS MODEL ( almost no demand side incentives, supply paid fixed fee or low commission per ride). As a challenger they would do all of this while Ola and Uber could not.

Now, this is just one example. I can talk about all the examples mentioned here and why some of them have worked. Some of them seem to have worked, but long-term, it’s unclear if they are sustainable businesses. And if I had to build a product that is a challenger to Swiggy, I won’t build the same product with the same supply and demand. I won’t say, “It is the same product, but you can get your food in 10 minutes.”

Because it’s not about getting the food in 10 minutes. It’s also about how you have a differentiated supply strategy and demand strategy. Has the business model changed? Why won’t Swiggy also launch the same 10 minute product? And guess what? They did.

There are more examples beyond on demand space.

Every one is betting on vertical agents. Incumbents are building their own agents. Enso has taken a contrarian bet on horizontal agents at a fixed price for SMBs. They are building an agent marketplace too. Hit on quality and reliability, but instead of complex multiple agent workflow, it is a bet on single task agents and a marketplace approach.

Everyone was betting on bigger foundational models, Nous Research went after fine-tuning open source models. Bet on open source models. Now they are building a decentralized AI training network on Solana.

11X ai and multiple other AI SDR agents were going after the outbound, while it is very easy for Clay (CRM with leads), Apollo (source of leads) to just build the agent that does outbound. They own the source of record or own the leads (first step in the funnel). What Day AI is doing? Completely reimagining the CRM so that source of record argument is not even valid anymore.

Will these companies work and become unicorns? Who knows, but atleast there is an unique play.

Coming back to Tj’s original tweet:

It is not about hustle. It is about counter positioning. It is not about incumbents being slow, it is about them not being able to kill their margin structure. It is about a different narrative altogether. It is about different business model that incumbent will find hard to pivot to.

It is more than a simple David beats Goliath because of David grinding narrative.