With so much change going on in media, it's hard to tell who's your friend or your enemy. Having a good strategy for dealing with others who could either be a great partner or a fierce competitor is crucial for many startups, as we saw with PayPal and Zingy. A few weeks ago at an event put on by The Week, I heard WPP chairman and CEO Sir Martin Sorrell use the perfect term to describe such a relation (in this case referring to Google): frenemy.
If Sun-tzu was right that you should keep your friends close and your enemies closer, then what should you do with frenemies? Smart entrepreneurs should at least start recognizing who their frenemies are. To give them a push, I just created an entry in Wikipedia for Frenemy.
It's my first Wikipedia entry, so please help clean it up and add your thoughts. Here it is as I originally wrote it:
A frenemy refers to a company that can be both a partner (customer, vendor, etc.) and a competitor at the same time. These type of relationships grow more common in times of great change and make for uneasy relations.
For example, Sir Martin Sorrell said he counts Google as a frenemy of WPP, the ad agency empire that be built. On one hand Google offers WPP a chance to buy cutting edge interactive ads for its clients. One the other hand, Google makes no secret of its intentions to allow anyone to buy ads for themselves, which could disintermediate ad agencies.
Strategies for dealing with frenemies varies. Sorrell said at UBS Media Week's conference that he wants WPP to be Google's biggest customer, but that he knows Google sees him as competition. Microsoft climbed to greatness on IBM's back, but had to go to great lengths to appease its much larger partner. Microsoft called this practice "riding the bear". Similar relationships existed between PayPal and eBay (the latter of which acquired the former after unsuccessfully competing) and YouTube and MySpace.
TrackBack URL for this entry:
Frenemy sure is catchy but the notion is not new. HBR published Brandenburger and Nalebuff's Co-opetition back in 1996. Same concept.
They actually do a pretty good job of distilling some handy game theory into applications. Either of them would make great VV interviews...definitely more meat-on-the-bone for the strategy-minded than Martin Sorrell soundbites.
Posted by: Domenico Tassone at December 9, 2006 2:22 AM