Among the most common mistakes startups make is to assume they have no competition. Unfortunately, the barriers to technology innovation have plummeted to the point where small startups anywhere in the world can develop and sell formerly challenging products like enterprise software, integrated circuits, and hardware of every description. The best a startup can every say about competition is “Google couldn’t find any competitors as of this morning.” Need more evidence? Take a look:
Crowdfunding sites are great places to search out new consumer products and technologies. Many well-known products like Oculus VR headsets and Amazon’s Ring video doorbell were launched by crowdfunding (in 2013 as “Doorbot” in Ring’s case).
Recently we searched Indiegogo for a few popular product categories. Take a look at the headlines on these products, and imagine how the developers felt when they discovered the other project running simultaneously!
World’s Smallest Bluetooth Earbuds
World’s Smartest eBike Drives
First and Only Robotic Suitcase
First iPhone 7 Case with an Audio Jack
World’s First Earpiece Translator
World’s Smallest 360° Camera
The World’s Smallest Magnetic Super Charger
World’s First Fast Charging Magnetic Adapter
World’s Most Affordable eScooter
And of course…Miniature Beer Breweries!
Competitors Come in Many Different Forms
Many of the examples above are cases of “parallel development,” where two startups recognized the same market gap and both pursued it independently. They probably both believed they created “the world’s first…” robotic suitcase or earpiece translator.
But competition can come in many different forms. If you are developing a new technical solution to a business problem, the “competition” evaluated by your customers may include:
- Direct competitors, who sell similar products to yours with similar benefits. The photos above illustrate many such examples.
- Superset competitors, who sell broad solutions that encompass your problem, though may not address it directly or even solve it very well. For example, Salesforce customers look to Salesforce to solve nearly every problem related to customers, sales and billing, even when better point solutions exist. Microsoft and Cisco customers similarly look to those vendors first, even if their offerings are not competitive.
- Internal/custom solutions, which may or may not be regularly updated. These are sometimes at the center of a company’s competitive differentiation.
- Legacy competitors, sometimes running on old software or out-of-date hardware (Windows XP or MS DOS!) These solutions may not have been supported for years, but sometimes companies are reluctant to fix what isn’t broken.
- Manual solutions, often based on Excel spreadsheets or shared Google documents, that may be no more than issue tracking lists or shared to-do lists.
Every customer’s internal operations and systems are different. This means that even companies that are outwardly similar may evaluate your solution very differently.
What You Can Do in the Face of Worldwide Competition
The best competitive defense is information: a superior understanding of market requirements and how they are evolving over time. This is how to build a strong competitive position:
- Validate your product plan early, so you can deliver the best possible match to market requirements
- Co-develop your product with technology partners, and start testing it with early customers
- Pay particular attention to the other products or technologies your customers will need to interface with your product. Don’t risk a first product failure for the lack of a particular API, interface or analysis.