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Biggest threat to corporates from startups is that they’re better at online marketing, says Silicon Valley tycoon

The biggest threat for big corporates from startups is that they understand and are better at online marketing, the head of Silicon Valley firm 500 Startups has said.

Dave McClure

McClure (right): “Startups tend to be better at online marketing”

Talking in a keynote session the All That Matters event in Singapore this morning, Dave McClure, founder of 500 Startups said that startups are a lot better at the basics such as using pictures and video to communicate simple messages in social media, and have been less distracted by the “sexy stuff over the horizon” such as AI.

In response to a question from interviewer Greg Unsworth, a partner at PricewaterhouseCoopers on how big corporates should feel about startups, McClure said: “They should be fucking scared shitless of startups because they’re going to be destroyed by them – at least in a few cases.”

He said that while over the next five-10 years big consumer-facing corporates are right to fret over technology innovation and changing business model, the most important competitive threat now is that “startups today tend to be better at online marketing.”

“If you look at Dollar Shave Club that was bought by Unilever for $1 billion, it’s not because Dollar Shave Club had a bunch of x-ray tech, or AI or drones. It’s because they recognised how to do fun and interesting marketing using video and using social media to distribute that message.”

“Where a lot of companies are concerned by hardcore R&D and technology, that’s true. But probably the basic areas are around how do you communicate with customers in the current day when people are carrying a mobile phone around, and a lot of people are on YouTube, Facebook or SnapChat or other apps where they learn about new products or services.”

McClure said that while there is “a lot of attention on sexy stuff over the horizon”, such as VR, the most exciting stuff that’s happening now is “actually with pictures and video.”

“It’s often overlooked because it seems so straightforward. But if you think about what Facebook, Twitter and SnapChat are all about, it’s about visual patterns, faces, people – and mostly with pictures and video, and applying them in ways that tell a story.”

He noted that Facebook’s acquisition of Instagram was driven mainly by the desire for access to the platform’s large audience, but also because “of pictures and video that help inform communication.”

McClure also commented that corporates were increasingly becoming influenced by the startup world.

‘A lot of corporates are becoming venture capitalists. Every corporate on the planet needs to start thinking like a VC. How do I make deals, how do I make selections, and what’s core to our customers, and what’s going to matter to them over the generation,” he said.

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