I’ve read a lot of advice on running a dot-com - hiring, raising money, marketing, etc. - but I haven’t come across anything good on how to react to and deal with competition. Which is a shame, because the emergence of competition can have a big psychological effect on you if you’re not prepared for it. Right now it’s looking like my company - founded on a good but relatively obvious idea - is likely going to have a dozen or so competitors, which is enough to be somewhat eyebrow-raising in a market of as-yet-unknown size.
My initial reaction to emerging competition wasn’t productive. A mix of irritation, a time-consuming desire to know absolutely everything about my competitors, and an urge to ‘cut them off at the pass’ by deviating from my current plans. After reflecting, and getting advice from smart people, the impulse passed. I figure any entrepreneur suddenly faced with an unexpected competitor or two is going to go through a similar thought process - especially first-time entrepreneurs who haven’t seen this before - so I thought I’d share my thoughts:
First, remind yourself that competition is inevitable. Markets attractive enough for one startup are always attractive enough for two startups. If you don’t see any competition - perhaps you should be worried about the viability of your market.
Second, try not to worry about ‘pre-competition’. Over the course of your startup’s life, you’re going to hear rumors - that ‘person X’ and ‘company Y’ (sometimes ’super big intimidating company Y’) are going to enter your space. Sometimes this’ll happen, sometimes it won’t - competition is often scarier in the abstract. So why waste your emotional energy before they’ve even launched?
Next, remind yourself that your competitors, despite your natural suspicions, are actually not moral pygmies who stole your idea wholesale from some guy you foolishly happened to pitch. Great ideas come to multiple people simultaneously, so give your competition the benefit of the doubt. You’ll sleep better.
Now, realize that ‘competition’ does not equal ‘clone’. Your company’s got a unique market hypothesis, and your competitors’ hypotheses will be different. You’ll be in the same market, but you’ll be executing in different ways. This is an opportunity, since a company that executes well against correct hypotheses beats a company that executes well against incorrect hypotheses. If you’ve got a superior understanding of the market, you can win, even against a better-funded competitor with a larger team.
Finally, remind yourself that startups are marathons, not sprints, and that markets are very rarely winner-take-all. That competition you’ve got will be with you for years - someone’s got to be second in your market. So watch them, but quit worrying about them. Focus on your own company, your market and your customers, and get back to work.
If there’s any resources out there on competition in startupland, or if anyone else has any thoughts or advice, I’d love to hear them in the comments.
4 Comments
Greg,
Not only does competition help validate your idea but it helps define it and it helps market it. Especially at this early stage.
Every customer they educate on the need for your common product can then ask themselves “Now that I *see* the need, what are my other options?”.
Then can explain why your product is better/faster/smaller/easier/different you can then take advantage of that opportunity.
In a sense they can actually help you define your brand/offering.
So congratulations on the competition.
J
Greg , Great post buddy… I feel you and i definitely hear you.
I came up with the idea of Million Impossible http://www.millionimpossible.com about 10 months ago and we launched last November with a limited capital but with a big dream.. Our competitors are well financed and well educated not to mention having far Superior technology advantage.
Just because you are small does not mean that you cannot make an impact. We are starting to make small waves and after 8 moths of being live we have come so far, yet we have such a long way to go.
We need more members to join our entrepreneur network (which is free to register)but i just wanted to that i love your post and it has given me food for thought..
Thank you
Bradley Chapman
http://www.milionimpossible.com
http://www.theunknownentrepreneur.com (my blog)
Start-ups are ever changing and in their early months/years evolve considerably. Hence, a competitor today may not be one tomorrow, so focus on execution and the rest will either work itself out or be something that you’re better prepared to deal with when you have a product in the market.
This is a lesson I learned over and over again through several start-ups I was involved with. Now w/my latest start-up, I heed this advice daily.
Great topic for a post, thanks.
I’m shamefully behind on my blog roll (and in fact I recently declared “RSS bankrupcy” for all but my friends’ posts and marked them read en masse). Hence the late response to your excellent question.
Competition with startups comes in three forms. By far the most common is from other startups. I remember hearing/reading somewhere (no idea of the source unfortunately) that “no startup ever failed because of competition from another startup.” My experience absolutely supports this.
The second is from big companies entering the same space as you. Even the best-managed large firms have trouble innovating and releasing new products/features in a timely fashion, so if you, your upper management and staff are focused single-mindedly on your specific business, you are doing something seriously wrong if you can’t compete. At worst the big company is validating your space, improving the potential to sell your business to one of *their* competitors.
The third is the only really scary one. In this scenario, the company that controls whatever ecosystem you are working in (Microsoft and .Net, Apple and iPhone, etc.) releases a product in your space, probably for free. In this case you are likely screwed. In fact, this is a risk every entrepreneur should think very carefully about before launching a startup. If the risk seems significant, don’t do it.
The bottom line is that in most cases competition from other companies is a far, far smaller consideration than reading the market correctly, designing a great user experience and implementing a kick-ass product in a reasonable timeframe. In other words, ignore competition and concentrate on execution.
Matt
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