Do your competitors matter?
Some thoughts....
Apologies for the late updates… as much as I want to say, this Substack ISN’T for perfectly-edited, fully polished thoughts, I still feel into the trap of making my words seem perfect. Note to self: it’s okay to write half-baked ideas and thoughts! You can always look back and reflect on them later.
Competition.
One of the most commonly-asked questions that VCs (or any friends, family ) ask when they hear your company/pitch: “Oh, but isnt another startup doing this? What if FAANG copies it instead?”
The truth is, it doesn’t matter as much as you think.
Here’s why:
Market share
In general, it’s rare for markets to truly be winner-take-all. You might think AWS is extremely dominant, but they actually have… only 33% market share in the global cloud market:
Sure, ~33% is still a huge and enviable position but it’s not the 70/80% market dominance as most people think. As long as your market size is big, there’s still LOADS of room for a startup / company to grow.
This is also why many VCs bet on the team and the market. If the market is huge enough and team is good enough, they can experiment till they find the right ideas / product-market fit / channel fit.
This is especially true if your perceived competition is a new startup. In general, these other startups aren’t that much bigger or further along than you are, even if they are better-funded.
What if it’s a big tech company like Google etc?
The world in which Google releases a feature that kills your startup is similarly unlikely, if nothing else because big companies move incredibly slowly. By the time they get around to cloning your business, you will have already succeeded or failed under your own power. (Dropbox came out in 2007, but Google Drive wasn’t released until 2012.)
Caveat: Facebook is coming with their own Substack competitor - we shall see.
Your actual competition
Your real competition isn’t your competitors, it’s the status quo. It’s the “traditional” way of doing things.
Visa’s biggest competition isn’t Amex, it’s cash. Startup founders and operators are typically optimistic people - they tend to underestimate how hard and expensive it is to truly change someone’s way of habits and usage. Sure, “acquiring” a user might sound good, but truly building retention and changing habits is tough.
Win with a better product
The way to succeed is to make your product better, not to worry about your competitor’s product. The way you make your product better is by spending time with your customers, to better understand their needs and to make sure you’re solving them. This is way easier said than done. In a startup situation where you’re putting out fires almost everyday, it takes considerable focus to really think about where/what to focus.
Any time you spend fretting about what other people are doing is time you’re not spending on things that will help you win.
When does competition matter?
That being said, competition does matter when they manage to raise a sizable war-chest of capital. Having capital alone is not the end-goal, but it helps makes the odds WAY EASIER.
With more capital:
Hire better people, who can help you figure and execute things better
Get better PR/media coverage, which in turn lead to more inbound partnerships/better hiring
More time and space to make mistakes
Reduced stress; spend less time on fundraising, more time on the actual business
Once again, happy to hear any of your thoughts!
If you’re in the space as well, highly recommend you to join my telegram news channel as well: https://t.me/scaleup1to10!
Albert