02. Competitive Matrix

Estimated Time

  • Reading: ~5 minutes
  • Video: ~8 minutes
  • Activities: to be completed prior to next week

Top Insights

  • Competition is rarely what kills a startup - be aware of competition but don't obsess over them
  • Competition can be direct, secondary, or indirect
  • At the end of the day, it comes down to the value that you deliver and not what your competition is doing

Episode Date: May 19, 2015 — Link to Video

Jason Calacanis | TWiST | Twitter | LinkedIn

  • This entire episode with Des Traynor on "starting up" is worth a listen, but if you want to focus specifically on the competition section skip ahead to the 21:55 mark of the video
  • Your competition can be direct, secondary, indirect
    • Direct competition is solving the same problem in a similar way to you
    • Secondary competition is solving the same problem but in a different way
      • Or in a way that is not quite good enough
    • Indirect competition is when there are conflicting problems that pull users in different directions
    • Ultimately it comes down to what job is the customer trying to do?
      • Des gives the example that normally you would not think that a flower business would compete with a chocolate business but on Valentine's day they are
  • Your customers will have to switch to your product
    • Either from an existing solution or from their current process
    • At the very least you are competing for their time and money
  • There are four forces that make this switch hard for the user
    • There are two forces that work in your favor
      • What is wrong with their current solution and why are they even open to a new solution?
      • What is attractive to them about your solution and what is your differentiator?
    • There are two forces that work against you
      • What is keeping them where they are? Is it a habit or it is simply easier to not change?
      • What is the fear of change?
    • It is your job to maximize the first two forces and minimize the other two
      • Be able to clearly identify your value proposition and make it easy for them to try your solution with as little friction as possible
  • So clearly there is always competition
    • We touched on this in the module "Does my idea exist?"
    • But it is a bit of a red flag if there isn't competition
    • This is often a sign that your idea is too niche or no market exists outside of your small user base
    • Link to Jason's tweet
  • So you need to identify your competition but you don't want to obsess over them
  • Think of the competition in the same way that a sports team does while preparing for a game
    • The top priority of your team is to be fundamentally sound on your own plays, have your own game plan, and focus on executing to the best of your ability
    • But being able to scout and understand what your opponent does is a benefit
      • If you know their strengths you can account for them
      • If you know their weaknesses you can exploit them
    • As you study your competition you don't obsess and you don't become discouraged
      • You become educated and aware of what they are doing
      • You don't change who you are at the core in preparation for the game, but you may tweak a few things to give you a better chance to win
  • This is the same concept with your startup
    • It is important to understand your competition but you should not prioritize research at the expense of your own development
    • You can learn from them and replicate them when appropriate
      • Presh talked about this in his content creation presentation at Founder University's 2-day intensive program on early-stage marketing
        • Identify keywords that your competitors are targeting and include them in your blogs, articles, and content to surface along side their content
        • Use Facebook's Ad Library to search what other's in your space are using for creative
        • You can use Phantom Buster to pull in a bunch of competitor creatives for inspiration
    • By research your competition will help you answer questions like:
      • What does their advertising look like
      • Where are they finding their customers
      • What specific places are you different and better
  • Part of understanding your competition is to help you build credibility
    • If you are going to be a leader in the space you have to be able to answer the question
      • "How are you different from Acme Corporation?"
      • "Why would someone buy your product over Acme Corporation?"
      • "Why would someone switch from Acme Corporation to your product?"
    • If you don't know who your competition is this gives a signal that you are not that experienced, in tune with the space, or have the expertise to be an outlier success
  • However, the priority is focusing on building your product, delighting your customers, and building your team
  • Competition isn't what ultimately kills most startups
  • Focus on delighting customers and building a great product
  • It is also worth noting that your early competitors are often more local to your product and more directly in your space
    • As an early-stage startup up you aren't typically competing directly with the large players in the space
    • A startup with a handful of customers is not going to go head to head with FAANG for example
  • The thing you really need to focus on is your value proposition and delighting the customers you have rather than worrying about what the big players are doing
    1. Link to Paul Graham's Tweet
  • Although having a general understanding of your competition early is a good idea it begins to become more important at the VC stage
    • As we've stated before competition in the space validates that users want it and investors normally see this as a good sign
    • As long as they can understand your clear value proposition and differentiator
      • Make this so clear that your customer/investor doesn't even need to ask how you're different
  • We coach our founders to use one of these models to represent their competition

Additional Resources


Week 9

🔲  Identify a few direct, secondary, and indirect competitors are in your space

🔲  Do a brief analysis & identify your strongest differentiator

  • What are they blogging about?
  • Who is their target audience?
  • What do you do better?