01. Does your idea already exist?

Estimated Time

• Reading: ~10 minutes
• Video: ~3 minutes
• Activities: to be completed prior to the next week

Insight

• The threat of competition is real and you can't ignore it
• However, the need to delight customers and focus on your own goals at the early stage is more important
• The level of attention that you need to give to your competition is often dependent on your product and the stage of development
• At the early stage, you should not place too much emphasis on the competition
• If you are asking yourself, "does my product or idea already exist?" you aren't really asking the right question
• Your focus should be less on competition and more on:
• Is there a market for this product?
• Do you have the funds to deliver it?
• Why is now the right time to solve this problem?
• That isn't to say you should ignore competition altogether
• This CB Insights study highlights the top reasons startups fail and competition makes the top four
• Being out competed for the space is a potential threat to your startup
• There is a difference between being aware of your competition and obsessing over your competition
• Jason points out to many of the founders he works with:
• Dealing with competition is not as important as delighting customers — that being said, you can't ignore the competition either. - Jason Calacanis
• Your ideas will be stolen, but your insights and your drive to keep building can't be
• If you obsess over your current customers and obsess over getting more customers you'll find that to be one of the biggest competitive advantages you can have
• So, is it bad to discover there are several competitors in your space?
• Actually, having some competition is not a bad sign; it is okay to find competitors
• The same CB Insights study finds that the top reason startups fail is a lack of need in the market
• Competition in your space shows that some need exists
• If there is no competition for your product that actually might be a worse sign
• It could signal the market doesn't desire the solution you are trying to build
• Why is there no one else in the space?
• Are you really the first one there?
• Or is the market simply not interested?
• This is why it is so important that you are validating your idea with actual users and potential customers as soon as possible
• Paul Graham in The Hardest Lessons for Startups to Learn agrees that competitors aren't the biggest threat but that doesn't mean you aren't competing every day
• Looking just at existing competitors can give you a false sense of security. You should compete against what someone else could be doing, not just what you can see people doing. A corollary is that you shouldn't relax just because you have no visible competitors yet. No matter what your idea, there's someone else out there working on the same thing. - Paul Graham
• Graham believes there are things within your control that are a bigger threat to the success of your startup
• He points to "internal disputes, inertia, and ignoring users"
• You simply can not ignore users and expect to be successful!
• Show Graham "a couple of founders who have some great idea they know everyone is going to love, and that's what they're going to build, no matter what" and he says he'll show you a startup that is doomed to fail.
• You need to be aware that competitors exist, but even more importantly you need to stay focused on your customers and the problem you solve
• Staying focused as a founder
• As a founder, there are so many moving parts and situations pulling for your attention
• Having a clear value proposition with a single business model that you have validated in the market is critical in aligning your responsibilities
• There are so many variables when creating a startup that you need to be able to prioritize appropriately
• Focus on acquiring new users
• The main goal of any startup is to find people who are willing to pay you for your product
• This needs to be a top priority from the start
• It is rarely too early to begin selling your product
• From the time you launch your landing page, you should be selling and looking for users
• Focus on delighting your current customers
• The startup flywheel - build a product, delight customers, build a team - does not function if you are not delighting your customers
• Talk to them regularly, listen to what they are saying about your product, and learn how they use it
• Focus on the core features of your product
• As we discussed it is not uncommon to want to wait until your product is "perfect" to launch
• But if you focus on the core features this can happen much sooner
• Identify your core features that solve a real problem and then build, build, build!
• Get that product in the hands of users as quickly as possible
• It is also not uncommon to launch an imperfect product and the get suggestions from users on ways to improve or add features
• Listen to your customers and categorize their requests
• Ask yourself if your core features align with the demands of your market
• Then reflect and balance the feedback with the overall vision
• Don't overbuild your product
• In other words, don't add features that aren't core to your product in hopes of attracting new users
• This is a common mistake made by founders and often leads to founder paralysis
• Stay focused on your core value proposition and deliver the solution that your users and the market demands
• Focus on your team
• How far can you advance this idea on your own?
• When should you outsource or hire a team member?
• Do you know how to accomplish the task?
• Do you need to learn how to do it for future situations?
• Is there something else that you need to prioritize?
• We'll go more in-depth on Building a Team in the coming weeks
• First focus on acquiring users, building a great product with core features, and building a team
• Then, you can spend time looking around to see what else is out there in terms of competition
• A quick hack for finding competitors is to Google "{competitor name} alternatives"
• One major advantage of doing a competitive analysis early is to learn where your customers are and how people are talking about your space
• Learning to speak the same language and include common words or phrases in your content creation will help with SEO
• You can leverage your expertise to write blogs and social posts to build SEO and credibility
• Be a thought leader in the space and write meaningful content to build credibility
• It is a good idea to identify competitors, but again do not obsess over them
• Maybe read a few of their blogs
• Try to understand their core features
• Identify if they are truly targeting the same market
• A common brainstorm activity asks you to think about "why will your competition beat you?"
• The goal is to surface weaknesses you can strengthen as a team
• There are some benefits to doing this, but be careful not to cross the line of studying your competition and obsessing over your competition
• Ultimately, even when thinking about competition, your focus should be on you and your company
• Peter Thiel said that you are "always too prone to find conflicts if you assume what is valuable is what the other person is doing. It is almost always better to ask what can I do, or our company do, that no one else is doing rather than focus on what someone else is doing that I want to take away from them."
• There are a few ways that you can think about staying ahead of the competition
• Ask yourself how will we acquire more customers?
• How will we make your product 10x faster and more efficient?
• The article How to Learn from Your Competition as a Startup defines competition as "anything your target audience spends time or money on to solve the problem that your product is solving"
• How are you going to build a product and convince those people your way is better?
• How will you build a team that is capable of delivering on these things?
• If you focus on these objectives the need to focus on "how will you beat them?" may just take care of its self
• In Working Backwards, the author talks about how Amazon values controllable inputs over outputs
• This concept is often referred to as leading vs lagging indicators
• Leading indicators are a way to try and anticipate the future
• Lagging indicators that provide feedback on what has already happened
• The key here for Amazon is emphasizing what employees can control and then measuring the outputs
• Then when employees at Amazon review metrics they can adjust their controllable inputs in areas where the outputs don't deliver the results they forecasted
• Note: This is a great read that Jason has encouraged his entire LAUNCH team to read — he featured it at his book club last month
• "Working Backwards is a breakdown of Amazon's approach to culture, leadership, and best practices from two long-time Amazon executives."
• A few of our portfolio founders shared their insights on how they thought about competition in the early stages of their company.
• Below are a few of their pieces of advice:
• "You need to own your product first. Rely on your experiences and relationships with your own customers over what your competition is doing"
• "There will be natural pivots from your unique experiences that position you to win the space - you can't get that info by studying your competition"
• "I read the blogs of our competitors regularly and will occasionally sign up for their free trials just to keep my finger on the market."
• "Trying to be someone else, as a founder or a company, from a high level, simply won't work - in that regard I've always focused on improving myself and my team by serving our customers."
• "I found it more important to focus on competition as an enterprise solution because we are displacing a common tool and it naturally comes up. I need to have an answer for why someone should switch to us."
• "You need to know how and why you are faster, more efficient, and cheaper. Although I would never chase price - in my experience it is very hard to displace a tool on price alone."
• "I never worried too much about the competition until we were trying to raise VC funding. They asked about it in several meetings, so I did some more formal research other than just glancing at competitors websites from time to time to see what they were doing."
• From an investors perspective, it is not uncommon to have different firms take opposite sides when it comes to how they view the importance of competition
• You can expect to hear an investor ask you "I've seen this done 100 times and it never works... what makes you so sure you'll be the one to solve it this time?"
• Or maybe the VC has a deep understanding of the space, and since they know the competitive landscape so well - they might not even ask you about it
• In this case it isn't that they don't care, but simply they are already familiar
• It might be enough for some VCs to know that no major companies are directly competing and they will place bets on if they think the founder can deliver
• Some simply ask about competitors because they want to know how well you know the space in general
• Are you a thought leader, an expert that they believe will win in this space?
• Typically, investors care about a few key metrics before they ask about competition
• What is your recurring revenue?
• How many paying customers do you have? How many users?
• Is your customer base in the United States?
• What are your month-over-month growth numbers?
• What is your bottom-up TAM?
• Are you building the product yourself?
• Then an investor may ask about your direct and indirect competition
• But, if an investor asks you about the competition and you tell them there is none - that is often viewed as a red flag
• There thoughts, as outlined above, immediately go to
• There is no market or
• This founder doesn't know their market
• Jason offers his thoughts on bringing up competitors during a pitch to investors in this quick video
• Essentially coming to the conclusion that sometimes it works to bring them up and sometimes it doesn't

• Peter Thiel at Sam Altman's Startup Class gave a well-known talk titled: Competition is for Losers
• During the speech, Thiel discusses the need to target a monopoly as a startup to have outlier success:
• If you’re a startup, you want to get to monopoly. You’re starting a new company, you want to get to monopoly. Monopolies have a large share of the market, how do you get to a large share of the market? You start with a really small market and you take over the whole market and then over time you find ways to expand that market in concentric circles. - Peter Thiel
• Mark Cuban discusses the need to always know your competitive edge on this episode of Starting Greatness
• The cliff notes version of the podcast can be found here
• Cuban describes the need to sharpen your edge or as he puts it "kick your own ass" in order to win
• He highlights three key characteristics that founders need
• Willpower
• Do you prepare and will you finish the task?
• He offers the following quote
• "Lots of people have the desire to win, or maybe even the will to win, but very few people have the will to prepare to win." - Bob Knight
• Focus
• Identify the key battle
• Do everything you can as a founder to win this battle
• Constant competitive awareness
• Have a plan for the giant competitor putting you out of business
• Use the principle of allocentrism to put yourself in the shoes of the other
• You can't fall victim to the common trap of thinking of the competition through the lens of what you would do, or why you think your product is better, or why customers should like you more. You need to give your competitors the benefit of the doubt and assume they will be smart.
• You can't ignore the competition, but you should prioritize delighting customers
• The key is to find a strong balance between keeping your finger on the pulse of the market and staying focused on the controllable inputs of your startup.

Additional Resources

• The Hardest Lessons for Startups to Learn
• The Simplest Way To Validate A Startup App Idea
• 3 Connected Ways To Differentiate Your Startup App Idea From The Competition

Activities

• Who are they?
• Do not obsess over them

• How are customers talking about it
• How are competitors talking about it
• How are investors talking about it

• Put this in your back pocket to review with your team down the road when you feel it is appropriate
• As Discussed by Mike Maples and Mark Cuban leverage the principle of allocentrism
• What would it look like for a massive competitor to come into your market and try to beat you?
• What would that look like?
• What can we do now to be ready before it happens?
• How can we stop the possibility of it happening?