Matt Cutts, recently published a video answering a question about how smaller website can compete against larger websites or brands. The question asked was like
How can smaller sites with superior content ever rank over sites with superior traffic? It’s a vicious circle: A regional or national brick-and-mortar brand has higher traffic, leads to a higher rank, which leads to higher traffic, ad infinitum.
Matt strongly disagreed with any assumption of automatically higher ranking of national brands in search results. He said that small sites have more chances of having regular updating of fresh contents as compared to larger sites, so small sites have better chances of ranking in search.
Matt Said that smaller sites with high quality contents can outrank larger websites, he said that niche specific targeted contents sites with better user experience will rank high automatically. Matt gave example of “Katamari philosophy” which says to start in small niche, than roll up and grow the niche once you got authority in it. Build relevant and reputable contents in niche rather than whole subject to gain higher ranking for small sites. Matt gave examples of Facebook and Pinterest who started as small sites and now grown as bigger in their niche.
So start working in niche based website, and build topical authority and then you can expand it gradually. So if your website has focus on UI, quality contents, niche topics which adds value for readers, you can outrank bigger sites.