Photo by Dimon Blr on Unsplash
1) It is good to have competitors
In my first business, I was very obsessed with competitors.
I had done an excessive amount of research, and gathered every bit of intel possible:
- using competitors’ products
- calling their customer service and bombarding them with a bunch of questions to try to figure out their policies
- visiting their offices as customers/partners to find out how their office looked like and how big the teams were, who are their founders, what’s their USP and strategy
- having daily updated spreadsheets of all their business data I could gather from their sites (how many auctions, how many bids, product values, etc)
- having my employees camouflaged as applicants to interview at competitors to gather more intel.
My poor dear employees can probably attest to how OCD I was.
I imagine that most start-up founders (at least in their beginning phases) have gone through similar obsession. And for good reasons: start-ups are essentially market-testing temporary vehicles that aims to figure out the product-market fit of what they are offering – a big part of the market discovery and research process is understanding the market and the competitive landscape of what competing or alternative businesses offer. Knowing intimately how your target customers have their current needs met or unmet is key to offering a USP (unique selling proposition) and adding real value to your customers.
It can be intimidating to be in a space with a lot of direct competitors. Imagine being one of the 2000 daily deal sites in China at its peak in 2010/2011 (hint: almost all of them shut down due to immense competition).
..
But it is a lot more dangerous when you are in a place with no competitors.
In my 3rd product, we had no competitors. There was a group of youngsters working on the same project – they set up their Facebook group with 5k fans, and had a landing page. But they didn’t end up launching for some reason.
So we happily called ourselves the “first and only” for almost a whole year (which is a very long time in startup world), until we realized the joke is on us. There is clearly no product-market fit – we were way ahead of the time for the market, and we had to put the project in hibernation.
A lot of times, smart investors see it as a good sign if there are competitors – it shows that there is potential in this market. If it’s a dead market, no smart entrepreneur or investor would touch it. Besides, having competitors means that they help you in educating the market if it is a new product.
Key lesson:
Being the “first and only” is only cool for the first 3–6 months. If you are holding that badge proudly long after that, you need to re-look at your product-market fit – maybe you are the sucker here.
Of course, there are exceptions:
A) your business somehow manages to create an impenetrable barrier to entry,
B) you already have a lot of traction, proving the new market that you created.
2) Don’t worry about competitors/copycats
In my first business, we were the 2nd comer in the market, and we eventually overtook the 1st comer and became the top dog. Along the way, there were 5–10 copycats/competitors that popped up – some even blatantly copying our site copywriting and banners (we could even find our site’s name in their T&C, and our exact wording in their web copies). At that time, we were annoyed by them, and we became reactionary in how to defend and beat these competitors/copycats.
All these didn’t matter in the end. One year later, none of us survived (including players in overseas markets that had raised tens of millions).
In my second business, we were in a space crowded with big players, mainly products of big Internet companies in Vietnam. We went ahead anyway, partly due to optimism fueled by new investment money, mainly because we knew all the existing products were subpar, and from our market research there was still a lot of needs in the market that were not met – the market looked ripe for disruption by a product made by a focused team.
Even with all these competitions, we are still alive and running (almost 2 years), while a lot of the bigger guys have closed shops.
Key Lesson:
For a start-up, product-market fit is what makes or breaks you most of the times, not competitors/copycats.
All my worries and obsession in my past 3 start-ups about competition, in retrospect, has absolutely zero weight in determining their success of failure. In fact, it might have used up some of our limited bandwidth instead.
There are only 2 things that really matter to your business:
1) your customers (if they don’t buy)
2) your employees/teammates (if they don’t execute).
You won’t ever have to worry about getting investment once you have these 2 sides sorted out. The only thing you should focus on is executing your own plan, making sales, gaining traction, keep moving, and iterating and making sure you are swimming in the right direction.
3) Don’t care about competitors’ PR
A lot of times, reading PR articles or interviews of competitors or even any start-up founders will make you feel inadequate and vulnerable, if you take things at face value. It falsely puts you into a wrong mental space, where you focus only on the glorious sides of others and the wanting side of your own start-up, be it traction, product, team, strategy, etc.
Everything is a rosy pictures when looking back. Every road is different and full of its own challenges and detours. The only constant among the success stories is they haven’t given up.
That is, if their success is really a success – truth is, a lot of these PR media are exaggerated or unverified, so founders could make up or inflate stories. From outside, everything looks glossy. Only when you are inside, you will see how naked you are.
being in a start-up is akin to being naked in front of a mirror
Most of the times, you will only notice your own shortcomings and flaws, while seeing the positives of others. And that is ok – being naked and vulnerable is the default state of being for startup. You don’t have the resources or defined markets that established companies have at their disposal. Just don’t feel insecure and disheartened when you read other’s glorified stories.
Chances are, most of the start-up founders you read about feel as naked and vulnerable as you.
Key lesson:
Take any tech media – PR articles or interviews or “success” stories – with a pinch of salt.
Learn from your competitors’ lessons and mistakes, but don’t worry about them – chances are you will fail by your own doings before others have a chance to beat you.