Your Fiercest Competitor is Not Another Startup

godzilla vs foe

Right now, there are at least 10 other teams across the globe working to solve the same problem as your startup. They are just as smart, driven, and resourceful as your team. The good news for you is that these teams really don’t matter in changing whether your startup’s outcome will be successful or failure. I’ve personally learned first hand not to get too worked up about new entrants promising disruption of the rental industry and change in the sharing habits of the world through collaborative consumption.

In the early days of Rentabilities, I would stumble across a new competitor about once every two months. Immediately, my blood would seath and I’d frantically navigate every page of their website to compare how they stacked up against our team and our product. A quick email with only a link to the site would be fired off to my cofounder, and we’d spend the next hour on the phone discussing this new potential threat. After the call, I’d spend more precious mental energy dreaming up the possible ways this new rival could crush us, just to make sure we were not blindsided.

In hindsight, I should have realized these new companies were not going to make or break my startup. Most rental merchants use paper calendars, green-screen keyboard-based point-of-sales, or some sort of other cobbled together system to take orders from customers. On the flip side, most consumers use Google and the telephone to find and connect with rental merchants, or just rent from the store they drive past on their way to work everyday. Building intelligent and efficient systems to connect both our merchants and customers is and always has been our hardest challenge with Rentabilities.

This is the case for almost all software startups. You are competing with Microsoft Excel. You are competing against Google and the telephone. You are fighting against people continuing to solve their problems the same way they always have, or not bothering trying to solve their problems at all.

I’m sure Uber’s #1 challenge right now is not competing with other on-demand transportation apps. It’s changing people’s traditional behavior of just walking outside and hailing a taxi. I doubt GrubHub is very worried about other food ordering apps, and instead is trying to figure out ways of stopping their customers from Google searching a restaurant’s name and ordering a pizza over the telephone. Mint’s main competitor was not another software startup in the early days. Their customers either used Microsoft Excel or just had a general laziness towards personal finances.

“Aaron’s father has research experience and we spent countless weeks figuring out what people really wanted before we ever launched our beta. Guess who we found out Mint’s biggest competitor was? No one. Apathy. This shocked me! Most people would rather not track anything and just see how they are doing when they go to the ATM. Guess who was #2? Ms Money, Intuit, Wesabe? NOPE. Microsoft Excel. Who would have believed that!” – Noah Kagan

I often give the advice to new entrepreneurs obsessed with competition to just stop tracking rival teams. Sure, you can take a quick look at their website to check how they are doing, or set up some Google Alerts on their company name, but to spend time talking in circles with your team about competitors is time lost talking about how to solve your customer’s problems. Your fiercest competitor is, and will always be, your potential customers not knowing about your startup or just not caring to solve their problems at all.

3 thoughts on “Your Fiercest Competitor is Not Another Startup”

  1. You’d be surprised how much the companies you have named do think about their competitors and are building to stay ahead of their competitors. Of course, a lot of product decisions are based on user feedbacks and vison in such successful companies, but people very much care about the competition.

    This honestly is great for three reasons:
    1. you get more ideas and think about things you might not have
    2. great to pitch your VCs how your market is gaining more traction and how you’re ahead of everybody else
    3. the one hour you waste discussing this with your co-founder is most likely not stressful but motivating and aggressive. It’s a great experience to critique a competitors product and make war-like plans. It’s not energy wasted IMO.

  2. This is such a terrific point. If the market you are chasing is big enough and growing, there is almost always room for a few entrants. Hard to keep in mind, however.

  3. Well said. As my co-Founder likes to say, “every city has more than one Chinese food take-out.” Pass the noodles…

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