How to Handle Your Startup’s Competition
Don’t let your company go the way of Blockbuster.
PHOTO CREDIT: Getty Images
When you're building a startup, it can be tempting to worry about competitors--especially the big companies running your industry.
But you have to focus on what you can control: moving quickly and looking ahead. Why? Because worrying about competition is an unnecessary distraction and makes you paranoid for no good reason.
Think of Blockbuster. If you ask a kid today what Blockbuster is, you'll get a blank stare. But most of us remember their stores vividly. And we remember how fast they became empty storefronts when Netflix put them out of business.
Interestingly, Blockbuster had the internal capability and supply chain to compete with Netflix. For a short while, they had success attempting to innovate. But their real estate crushed them in the end. All of their stores were filled with DVDs--they couldn't unwind fast enough to free up the cash they needed to invest in other areas.
Speed did them in. Big companies can't move as quickly as startups. Suits are suits for a reason. They are risk averse and afraid to make decisions out on a limb. So, don't worry about those competitors.
And honestly, you're too small for them to care. Startups tend to have an over-exaggerated sense of self-importance, but don't fall into that trap. Large companies have businesses to run--big ones and good ones despite their lagging behavior--and worrying about a flea-sized startup is not top of mind. Trust me on this.
If that wasn't enough to convince you, do these three things:
Spend Time On Research
Your main worry should be other startups. Startups knock each other off at an alarming rate. Any successful startup is going to attract copycats--it's inevitable. Honestly, I don't worry about this too much, because I spend a lot of time and money upfront on research. Often, weaker players don't.
In-depth research is the best way to prevent stress from competition. Do your competitive analysis before you dive in. Find an industry where there isn't a large amount of interest. Believe me, you can't compete in a crowded field. You don't have the money to do it.
And you can do all the right research on your own. You don't need a lot of paid data or advice to figure out the competitive situation in a particular industry.
Make sure there's something special about your idea that's impenetrable by larger or smaller competitors. You have to believe in your concept more than you believe in yourself. Business plans don't experience doubt. Well-researched investment theses don't get discouraged or afraid. Your belief comes from putting in time and effort on research, and knowing you've got something others don't.
Keep An Eye On Other Startups
If you've done your research, you'll likely see threats to your business won't come from big companies--they'll come from other startups.
There's a reason large businesses haven't already tried your idea.
With my first startup, Silvercar, I discovered the rental car industry couldn't do what we were doing. Their business model was too complex. Organizational reasons stood in the way of innovation, and those reasons had nothing to do with the quality of our product.
You have to understand, these huge companies are focused on managing their current business, growing 10% a year, and doing what they're supposed to. Their mindset is completely different. Their job is not to be wildly creative. It's to effectively manage an established business model and move it forward. No one's taking risks.
Established competitors are more likely to write you a check for your company, because their CEOs realize they're not set up to knock off startups.
If you're competent--and know the big companies' capabilities and likely response--you're fine. You don't need to think about them anymore. But keep an eye any up-and-comers who can innovate as quickly as you.
With my second startup, Washlava, we are a first mover. So I invested heavily in patents. I hired the best patent firm in the country for mobile technology, Fish & Richardson in Austin. I was blown away by the three patent applications they wrote. A lot of people think we're looking for protection from the big guys, but it's just the opposite.
Focus On What You Can Control
You can't control your competitors' behavior, so why worry about it? Instead, focus on quality and execution. If you have a higher-quality measure than the next guy, you'll do better than him.
You don't have time to constantly think about who's in the rearview. Work on what will set you apart.
This differentiation comes down to anticipation, because unexpected things will always happen. But if you accept this, and you anticipate 80% of unexpected things, you'll be in great shape.
So, start looking ahead instead of worrying about your competition. You know you have a great idea large competitors can't push you out of. Go out, execute, and turn them into the next Blockbuster.
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