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
- 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
- Y combinator talks to this specifically at the 18:45 of this podcast
- Graham estimates that maybe one out of 1,900 of YC's portfolio companies have been killed by a rival that’s tackling the same problem
- 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
- 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
- There are several other options to do so
- You can read more on How to create a powerful pitch deck competition slide that will ace investor meetings
- Or look through some more of the Competition Slide Templates for ideas
Additional Resources
- How to Do a Competitive Analysis (with Free Template)
- How to Conduct a Competitor Analysis
- Why You Need to Know Your Business’s Competition
- How to Learn from Your Competition as a Startup
- What's a Competitive Analysis & How Do You Conduct One?
Activities
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?