from the it's-a-sign-of-a-market dept
I was recently talking with a group of folks who were discussing an idea for a new product, which I thought was pretty compelling. However, one of the concerns raised by someone in the group was the fact that there seemed to be a few other companies already in that space, and while they weren't doing the exact same thing, there was concern that this product wouldn't be considered "new." This is an issue that comes up a lot, and one that we recently talked about in suggesting that companies need to get over the
wasteful and inefficient view that everything they do has to be wholly invented from scratch. Along those lines Chris Dixon has an excellent post, which he titles:
"competition is overrated," but I think he really means that
fear of competition is overrated. He notes that competition in a market often means you're on the right track:
Almost every good idea has already been built. Sometimes new ideas are just ahead of their time. There were probably 50 companies that tried to do viral video sharing before YouTube. Before 2005, when YouTube was founded, relatively few users had broadband and video cameras. YouTube also took advantage of the latest version of Flash that could play videos seamlessly.
Similarly, just because there are so many companies in a market, it doesn't mean any of them are really executing well:
Other times existing companies simply didn't execute well. Google and Facebook launched long after their competitors, but executed incredibly well and focused on the right things. When Google launched, other search engines like Yahoo, Excite, and Lycos were focused on becoming multipurpose "portals" and had de-prioritized search (Yahoo even outsourced their search technology).
In fact, this succinctly reiterates a whole bunch of the points that we've discussed repeatedly over time. First, there's a big difference between
ideas and execution. Just because others are in the market (and even well established), it doesn't mean you can't do a better job. It also highlights the difference between
invention and innovation, where invention is just coming up with something new, but innovation is really bringing it to market successfully. Facebook and Google are both great examples of innovative companies who didn't really "invent" their initial markets.
And Dixon then brings it back to the
value of imitating, on which there's now an excellent book out (which I'm still only partially through) called
Copycats. Dixon points out that in being a "follower" initially, you can build off of their work:
The fact that other entrepreneurs thought the idea was good enough to build can be a positive signal. They probably went through some kind of vetting process like talking to target users and doing some market research. By launching later, you can piggyback off the work they've already done.
On top of that, I would argue that you can also
avoid some of the mistakes that they make.
In the end, he points out that worrying about competitors is really usually the least of your issues as a startup:
Startups are primarly competing against indifference, lack of awareness, and lack of understanding -- not other startups. For web startups this means you should worry about users simply not coming to your site, or when they do come, hitting the BACK button.
Consider that the startup equivalent of the messages told to tons of content creators these days: that obscurity is a much bigger threat than "piracy." In the same way that "piracy" is really just "competition," those too focused on that sort of competition will often miss the more important fact that you need to find actual, real users and customers who are going to stick around.
One other point on all of this: when you limit a market to just one player (via monopolies like patents), you can actually lose out. You don't get those other players in the market that you yourself can piggyback off of as well, and there's less incentive to get the formula right. Competition is a good thing in how it drives a market, but if you're working in a startup, you shouldn't necessarily be so worried about it directly.
Filed Under: competition, entrepreneurs, execution, ideas, obscurity
