Making a killing: The 10 reasons tech giants have grown during COVID-19
The tech giants that have thrived during the COVID-19 pandemic have 10 key attributes in common — and all businesses can learn from their success.
What do tech giants such as Xero, Amazon, Microsoft, Facebook, Alphabet (Google), Netflix, Shopify, Salesforce, Adobe, Atlassian, Tencent and Alibaba have in common?
They are killing it through this crisis, growing customer engagement and reaching all-time-high market valuations.
Investors have flooded to buy shares in these companies because they are seen to be the most resilient and best positioned to strengthen in the post-crisis months ahead.
So what can we learn from these high-growth companies that are changing the way we work, create, connect, shop and play?
There are 10 key points.
1. Inspiring founders
Many of these tech giants have been founded by leaders who are visionary, adaptive, curious, creative, and composed.
Amazon’s Jeff Bezos, Salesforces’ Marc Benioff and Atlassian’s Mike Cannon-Brookes all possess these attributes and have galvanised their organisations to focus on their purpose, invent and deliver value to all stakeholders.
2. Deliver beautiful user experiences
These companies deliver unique and better product experiences.
They are focused on solving a customer problem in ways that are faster, easier and cheaper.
Google Search, for example, is simple, functional, contextual, predictive and free.
3. Products get better with usage
Leveraging AI, Netflix and Facebook recommend relevant, personalised content based on your previous interactions.
As a result, the more you use the product, and the more it learns about your interests, the better it gets in recommending solutions which, in turn, drives usage and loyalty in a self-reinforcing cycle.
4. Vertically integrated
These tech giants largely control the value chain from strategy, design, development and distribution to customer relationships.
They have a direct relationship with their customers.
They own the customer relationship as well as the data that is created throughout the entire customer journey, which consistently iterates to improve the customer experience.
5. High active usage
These companies understand and measure the drivers of revenue including choices around acquisition, activation, retention, referral and resurrection.
Many have deep daily engagement with a high proportion of frequent users who rely on the product or service every day.
Tencent’s ecosystem is so wide it features news, social, e-commerce, entertainment, payments and cloud solutions to capture more share of time, interactions and wallet.
6. Recurring revenue
Amazon has been able to generate 150 million Amazon Prime members, who pay a monthly subscription fee for faster delivery, lower prices and video content.
Importantly, Amazon Prime members are worth more than twice as much as non-Prime customers in annual revenue.
Shopify, Adobe, Salesforce, Xero and Atlassian have developed a Software-as-a-Service business model with recurring revenues and low levels of attrition on renewal.
7. Positive unit economics
As revenues from more and existing users scale, costs go down per unit leveraging fixed costs.
These companies have used their positive unit economics to deliver high levels of liquidity and strong balance sheets.
8. Global reach
They typically have wide global reach to attract, retain and improve active usage among hundreds of millions of users, which creates enormous scale and network effects.
9. Talent accelerator
These tech giants attract the best talent.
Young leaders gravitate to these businesses to learn and develop.
These companies have well-defined cultures, high employee engagement, very competitive rewards and strong development programs that accelerate careers.
10. Visionary storytellers
These companies have clear purposes, well-defined cultures, strong political influence and are thought leaders.
Their leaders create clarity out of complexity and communicate their vision with compelling storytelling.
So, as you re-imagine your business, beyond the recovery stage, what learnings can you apply from the few companies who have consistently grown and are killing it through this crisis?
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