If you have a great idea or are starting a business that addresses clear and understandable needs you should expect others to be working on something similar. If there’s nobody even touching the concept on which you’re working you should ask ‘Why is nobody else doing this? What don’t I know?’ Don’t be surprised if others are already working on a similar idea or trying to exploit the same opportunity. Dan Martell says “The challenge is to not let it distract you.”
Notable founders comment on competitors and competition via Startup Quote!
Competition SHOULD NOT prevent you from starting your company. If anything an entrepreneur should embrace and learn from startup competitors. Ben Yoskovitz, Founding Partner at Year One Labs, says “It should color your thinking, create the appropriate context and help educate you on what’s going on in the market.”
Picking The Right Startup Competitors
Customers Decide Competition – “Until you’re customers start asking or mentioning your competition, they aren’t your competition. Even direct competitors might not be seen that way by customers. People think Skype and their Phone are two completely different solutions – some could argue they aren’t – but does AT&T really compete against Skype? Not until their customers decide.” From Dan Martell
Core Values vs. Features Competition – Make sure you understand that you should focus on Core Values that are at the foundation of your value proposition and not Features that help a customer access or appreciate these Core Values.
The “Do Nothing” Competition – “It’s not these so called competitors that you’re competing against; it’s your customer’s decision to do nothing…. Stop worrying about other startups and care more about your customers indifference.” Dan Martell Venture Capitalists often ask “what is the main reason your customers will be compelled to buy?” or in other words “Your prospects have been doing fine so far without doing anything. Why would they buy your stuff when they could keep doing nothing for free?”” From April Dunford http://www.rocketwatcher.com/blog/2009/03/when-having-no-competition-is-a-problem.html
The Keyword/Topic Competitor – Google, google, google the words you use to describe your business to customers, investors and friends. This is the competition that is the easiest to find and probably the most active amongst the people you’ll consider customers (how do you think they find this product/service? Google, DUH!) Ben Yoskovitz, Founding Partner at Year One Labs, has this to say about researching keyword competitors ”Domain knowledge is a key advantage; and I bundle in competitive knowledge as a key component of that. These days I use Crunchbase for competitive research… With one competitor’s name you can typically find a bunch of others. AngelList is also extremely useful (although a lot of the information is probably hidden to entrepreneurs.) Try Quora as well. And Google almost always returns interesting results. Find a competitor’s name and type in, “[company name] competitors”.” http://www.instigatorblog.com/competitive-research-101-for-startups/2011/08/30/
The Bigger Picture Competitor – Your competitors aren’t always the newest and coolest companies and products. There might be part of your market that has older or hidden suppliers, manufacturers or retailers that don’t fit into the original market you thought to exploit. Look at as large a sample of your potential customers as possible to find huge and hidden opportunities in breaking into the supply chain for similar products that you plan to sell.
Embrace Your Startup Competition
Learn from the Competition – Rebecca Woodcock (Co-Founder, Cake Health) says “Knowing their business model help you define yours. It can be difficult figuring out your competition’s revenue making plan, especially in the early stages, but they do leave hints around… Figure out why it will be a challenge, then do the reverse and ask why does this model make sense. By doing this, you’ll hone your own direction, and maybe even decide to go down a different route. Points of differentiation could make you potential partners. Not all competition is created equal. Some you will be going toe-to-toe with for the same market with the same product. Others may have strong overlaps, but may have a different go-to-market strategy or business model. These are the ones that could eventually make great partners (…or acquirers), so take note and make friends. Just don’t give away your trade secrets.” http://www.women2.org/making-frenemies-competition-is-good-for-your-startup/
Competition Helps You Build a Market – It’s like a moving, the more help you have the faster you’ll end up where you’d like to be. Rebecca Woodcock (Co-Founder, Cake Health) points out “Competition heats up the space. You can use their successes to catapult yours. If you do your homework, you should have some idea as to their business plan, revenue or fundraising stage, so plan around those so you can leverage their announcements to drive attention to you. It shows potential partners and investors that something is happening here, and they need to pay attention. Of course, too much heat can burn your industry out. If you want to build a Groupon clone now, you already missed that train.” From Rebecca Woodcock (Co-Founder, Cake Health) http://www.women2.org/making-frenemies-competition-is-good-for-your-startup/
Competition Proves a Concept Twice as Fast – Same as building a market, and the questions I asked above (“Why is nobody else doing this? What don’t I know?”) you don’t know if your startup will work until there is a critical mass of purchases and customers. The faster you prove there is money and need in this space the better for you, your investors and your customers. Marty Zwilling from Startup Professional Musings Blog says “First-mover advantage is a double-edged sword. Being first to offer something is often used to cover the fact that you have no patent or intellectual property. Investors will conclude that you are highly vulnerable to the deep pockets of big players who will wake up and kill you when you show traction. The best defense is a dynamic product line.” http://blog.startupprofessionals.com/2011/09/how-you-talk-about-competitors-speaks.html Rebecca Woodcock (Co-Founder, Cake Health) says “Competition validates your crazy idea… When I was initially pitching my idea for feedback, often the first question I would get was “How come no one else is doing this? There must be a reason, so how are you going to do it?” No competition means you are a bigger risk… Competitors make it a safer market for customers. If you’re the only game in town, you are a bigger risk for everyone to buy into, whether it’s customers, partners, or investors. Plus, competition says you were right.” http://www.women2.org/making-frenemies-competition-is-good-for-your-startup/
Hiding Your Work – being overly private of your work, knowledge or product can mean you miss all kinds of opportunities. You don’t have to share everything but if you lock yourself in a room and never speak to anybody you’ll go no-where. Here’s my write-up on Non-Disclosure Agreements and the benefits and drawbacks of extreme privacy on a startup with the valuable lesson to be learned from the Facebook movie. “NDA, Intellectual Property and the Entrepreneur – Lesson from ‘The Social Network’”
Misinterpreting Competitor Actions – Press releases or coverage, successful fundraising rounds, partnership announcements, advertising etc. by a competitor are very telling so it’s imperative to understanding these action in context (why they’ve happened and if they’re successful). If a competitor starts advertising on Television you need to know how, why and with what results they are doing so. Don’t assume that just because a competitor does it you should as well.
Using the Wrong Metrics – Understand what success means for your startup then see if, and how, potential competitors share and approach this important information. Another great quote from Dan Martell “Sure they might have reported thousands of users, etc – what they aren’t telling you is their core metrics; activation, retained users, net promoter score, etc. They share vanity metrics to mess with you and you let them.” USE THE RIGHT METRICS