In just two years of operation, Zoho has launched 15 Web-based productivity applications — far more than a slightly richer, though admittedly broader-based, competitor named Google.
Logically, this should not be. Google has countless billions and is famous for hiring only the best and brightest programmers. Such resources should enable it launch more programs — and better programs — than a small company like Zoho.
Yet Zoho and many other tiny companies routinely devise more and better software than their larger competitors.
Google developed its own video but YouTube crushed it (before Google bought the company). Facebook, which was developed by a college kid, beat out programs devised by armies of corporate programmers. Flickr demolished Yahoo’s photo program (so Yahoo bought it).
The biggest example of the law of diminishing returns is undoubtedly Microsoft’s Vista operating system. Microsoft spent many years and $9 billion developing Vista — $9 billion — and many users think its worse than the system it replaced.
All this begs a couple questions. Why does this pattern hold so consistently and why don’t large companies find some sort of solution?
These are not just important questions for big technology companies. They are big questions for everyone. If Microsoft and Google could use their development dollars as efficiently as Zoho and Craig’s List, our economy would grow faster and our lives would get easier.
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