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Why Startups Shouldn’t be Afraid of Competition

When I jumped into the startup world in 2000 with Blanketware, we truly believed we had an idea no one else had discovered. So, it was a shock when we stumbled on other startups also focused on the giving users an easy way to find and online services.

Despite our entrepreneurial enthusiasm, the idea of competition, while a reality, wasn’t something we had considered. After all, our idea was so unique and novel, and we were so smart, it was hard to believe someone else could come up with a similar concept.

At first, we were spooked. The open road with no competition had suddenly evaporated. Suddenly, we were looking at companies that were better than us or getting traction we weren’t experiencing. It put us on our collective heels.

In time, however, we recognized competition is one of the harsh realities of doing a startup. While you may like to think no one else has developed a better mousetrap, there are lots people working on the same idea.

I was recently reminded about the realities of the competitive landscape by a friend who has a startup making impressive progress. Over the past few weeks, he has discovered several competitors, including one that has attracted significant users and brands.

In looking at these rivals, my initial reaction was “interesting but not surprising”. To not have competition would be a concern because it suggests the idea may be ahead of its time, it hasn’t resonated with users, or there is no demand for your product.

Competition is healthy because it forces a startup to be aggressive, pro-active and focused on doing a better and/or different job to meet the needs of customers. A good idea will only get a startup so far, it’s how you develop and push the idea that matters.

Another important consideration is having an idea and starting a company is the easy part. In the scheme of things, it’s easy to develop technology, hire employees, create a slick logo and raise some money.

The hard part is execution, which involves the combination of technology, marketing and sales to create a viable business. This is where many startups with great ideas go off the rails because they can’t make the leap from idea to business.

For startups, it means while there might be rivals with impressive looking Web sites and customers, it doesn’t necessarily mean they’re executing. At the end of the day, he or she who executes the best wins.

Bottom line: Don’t be afraid of competition. Recognize it, learn from it, leverage it…and focus on executing better.

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  • http://www.rho.com Roger Chabra

    Having strong competition is particularly useful for startups who are creating new categories or spaces. Building market awareness about a new concept/product/service is an incredibly time-consuming and expensive proposition. If the space is truly valuable and large, it is definitely too much work (and money) for any one startup to handle. Having others out there on the front lines to help with the missionary work of educating customers about the value proposition is a big benefit. We are seeing this with many of our investments, including Chango. They are focused on the search retargeting space (a space and term that didn’t exist a couple of years ago). The company benefits from competition from a couple of other startups who are also considered leaders in the space.

    • http://www.markevanstech.com Mark Evans

      Roger: Good point. I look at the influence market as a good example of how awareness is being driven by a growing number of small players, particularly Klout, which has done a terrific job of marketing and putting the spotlight on a fast-growing but nascent marketplace.

      As always, thanks for the comment and happy holidays! Mark

  • http://inoviacapital.com Karamdeep Nijjar

    Great post Mark. It’s important for early stage companies to not be discouraged by competition. Google wasn’t the first search engine, Facebook was preceded by Friendster/MySpace, and Apple didn’t invent the smartphone. You don’t get a prize for being first, you get a prize for being the best. Its a bit naive to think that your company is the only one capable of identifying a market opportunity. There are probably half a dozen equally smart teams working all over the globe on similar ideas. Even if you do stumble upon an untapped market, you’ll have a well funded competitor at your doorstep the second you start generating serious traction. You have to accept that and move on. Fred Wilson had a great post regarding the only true competitive advantage that can sustain you in this situation – a visionary “Roadmap” (http://bit.ly/uUYz2P).

    Our best investments at iNovia are in ridiculously competitive markets (AdTech, eCommerce, Gaming, etc.). Obviously Chango is a great example of that. We also recently invested in Vidyard, an online video platform that has more direct competitors than it has employees (http://bit.ly/s6Sb5H). Our rationale for the investment was that this particular team had a unique product vision that was rooted in the true needs of their customers, having experienced the frustrations of existing solutions first hand. Just by speaking to them, you quickly realize that they won’t be phased by a losing a few deals to more mature companies or having to compete with copycat products from newcomers. They aren’t just thinking of where video will be 6 months from now – they’re thinking of what it will look like in 5 years. I think that all great companies share that trait, regardless of when or where they entered the market. The key is to make sure you strike the right balance, so you don’t go out of business before being able to execute on the longer term plans.