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Treat the Competition Differently, Depending on Your Stage

All strategy depends on competition. – Bruce D. Henderson, founder of the Boston Consulting Group fish competitionThe topic of competition for startups has recently come back via two posts;  Competition from venture capitalist Rob Go, and Why I Don’t Stress Over Competition Anymore, by entrepreneur Alex Turnbull of Groove. Each post tackled a different aspect of dealing with the competition. Alex suggested not worrying about the competition, but dealing with it, and Rob likes to see startups that adopt a balanced view of the competition. To round up this topic, there’s also Fred Wilson’s 2011 post Competition – The Pros and Cons. My viewpoint is: you need to treat the competition differently depending on the stage of startup evolution you’re in.

1. Idea stage

At the idea stage, you’ve decided that you will either disrupt incumbents via a new way of doing things (your product), or you will enter an emerging market that will grow with you, and where you hope to either dominate that market, or carve yourself a big enough share in it. At this point, you may or may not be able to draw a competitive matrix (or petal diagram), and if you do, it may or may not be accurate. What is important is that a) you know how different you will be from the existing players or (future) competitors, b) what position you want to occupy in the new landscape that you see, and c) how you’ll get there, something that has nothing to do with the competition itself. The underdog in many products…can pick and choose where it wants to hit the giant; the giant, by contrast, must defend itself everywhere. — George H. Lesch, ex-president of Colgate-Palmolive Company

2. MVP

At the MVP stage, you still don’t know who your competition really is. Who you may think the competition is, may not the competition, because you’re still iterating your product, and bumping into different types of users or customers. I would argue that during the MVP stage, your competition is actually the time you put into customer development and getting your minimum viable traction in higher gear. MVPs are unique beasts. That’s why defining a competitor against an emerging product or market might be a difficult thing. You are competing against is the mind share of clients/users more than against a particular company or product. Competition brings out the best in products and the worst in people. – David Sarnoff, founder & president of RCA

3. Product/Market Fit

At this stage, the competition starts to get more clearly defined because your trajectory is more stable, so you start to see some patterns emerge. But it’s also possible that some companies who were competitors bifurcate into diverging paths. For e.g., about 3 years ago, Box and DropBox were much closer competitors than they are today. Box bifurcated towards collaboration over documents, whereas DropBox continued to focus on documents storage and transmissions.

4. Growth

You really start to grow once the market has started to define itself, and you happen to hit that magical timing window. At this stage, market education is important, so having a handful of competitors that help making the pie bigger is a good thing. But the key is to grow faster than the rest of the players in your market. This is when leaders emerge, and others get left behind. Some companies like to grow fast while being under the radar, then they suddenly emerge as a leader by showing some great numbers that validate their leadership. That’s a good strategy, if it applies to you. The growth phase is often won via superior marketing and growth hacking over the competition. Most of our competitors were manufacturing-oriented, generations of fine pickle makers and proud of it. We came in exactly the opposite, as marketers who manufactured [in order] to have something to sell. – Robert J. Vlasic, president of Vlasic Foods

5. Scaling

If you are lucky enough to have made it through the scaling stage, at this point you have a new option for dealing with the competition: you can acquire them. Facebook acquired FriendFeed early because they were encroaching on the Facebook friend’s news feed strategy. Facebook later acquired Instagram because they saw it as a mobile on-ramp into Facebook. Recently, Facebook wanted to acquire Snapchat because their users were going there, at the expense of spending less time on Facebook. Here are additional thoughts on how to weaken the competition and strengthen your position:
  • If you’re in a B2B market, know exactly how to sell against your competition. Have a matrix with specifics such as “against competitor X, lead with feature Y; for competitor Z, focus on these 2 options, etc.” The better you know your competition, the more you’re able to attack their weaknesses, while emphasizing your strengths.
  • If you’re competing in a consumer market, keep evolving your product. Kill it with features that increase user engagement. High user engagement builds a fortress against your competition, because users won’t have time to go elsewhere.
  • Articulate your value proposition really well so that the rolling ball effect of your product on the market keeps getting bigger. The clearer your message is to the market, the more “pull” you will have, and a higher share of mind.
  • Keep growing faster than the competition. If an early market is characterized by a lot of competitors with equal strengths, when a player distances itself from the pack, it becomes the leader. Growing sales or users is a great way to beat the competition.
  • Differentiate strategy from tactics. Think competitive strategy in order to leap frog the competition and out think them, but compete on the ground with strong tactical blocking and tackling.
  • With B2B customers, when you have lots of sales activity, start doing win/loss analysis reports that outline exactly why you are winning or losing in the market. Collective learning will make your sales team stronger.
Finally, while seeing a lot of competitors is ok early in the game, having too many players later can commoditize and balkanize the market to the point that it could hurt all players. That’s why sometimes VCs recognize that, and they fund a given startup in order to allow it to grow more than their competition. 3 is the perfect number of market players in well defined markets; maybe 5 maximum. Beyond that, it gets messy.
Keep your friends close, but your enemies closer. — Sun Tzu

Entrepreneurship, Sales, SaaS, Marketing, Failing, Mobile, Scaling, Growth Hacking,- Weekend Roundup #18 Nov 11 2013

Startup Management is a manual selection from the hundreds of weekly articles being curated. Previous issues are available here. There are 21 article links in this edition. Entrepreneurs and Blogging    Prompted by Keith Rabois on Twitter, there was a discussion on whether successful entrepreneurs have time to blog. Chris Yeh asked Should entrepreneurs blog? Mark Birch chimed in with Successful Entrepreneurs Do Not Blog? And I wrote a post entitled All Entrepreneurs Should Blog. The consensus is still debatable, but at the end of the day, it is up to the entrepreneur to blog or not. Blogging is not related to their success or failure, rather to their willingness and ability to communicate by writing, and seeing the marketing and social capital value behind blogging. Mobile ROI Ameet Ranadive from the product management team at Twitter has an insightful post, Why Mobile ROI is So Hard. It covers mobile monetization, with a focus on m-commerce, perhaps a hint on upcoming Twitter products in mobile commerce. “28% of mobile searches result in a conversion (defined by store visit, call, or purchase).” SaaS David Skok has a mega post, Manage Customer Success to Reduce Churn. The key point is that focusing on customer happiness is not enough. You need to make sure they are receiving the promised benefits. “Customers bought your product to get a clear business benefit. To make them happy, I believe that you need to make sure they are getting the business benefits they hoped for.” Sales Jason Lemkin has another one of his practical advice posts, If Your VP Sales Isn’t Going to Work Out – You’ll Know in 30 Days. He lays out 5 top things they should do, and the order of priority for doing them. Here’s one of the red flags: “if they start creating and driving deals themselves,” they should be out in 30 days, because they didn’t focus on recruiting a team instead. Bob Marsh asks and answers, What Has Changed in Sales? The Sales Manager. And here is a third post on sales, The Trend that is Changing Sales, where Steve W. Martin points to the increased nature of inside sales. Marketing Communications In Deconstructing PR: Advice From a Former VentureBeat Writer, Conrad Eyusa outlines a step by step approach for working the media. I know it works, because I have used a similar approach successfully several times. VC-Entrepreneur Relationship Fred Wilson and Matt Blumberg have another set of related posts on this important topic. In What Makes For The Most Productive Management-VC Relationship, Fred advises to “keep the frustration to yourself,” when dealing with startups. And in Getting the Most of Your Investors, Matt says to “take on-boarding seriously,” when it comes to new board members. Failing Last week, the Everpix shut down was publicized, and lessons were being drawn. Here’s a pair of posts that explain why the company wasn’t able to raise more money to continue operating, although they had a great product. Andrew Chen weighed in with When a great product hits the funding crunch, and Casey Newton at The Verge wrote Out of the picture: why the world’s best photo startup is going out of business. And related to this, here’s a post by Hutch Carpenter covering 10 examples of fabulously flawed product-first thinking. Marketing James Heaton has a short post, What is Marketing Strategy? that builds the case for marketing and helps you to differentiate between marketing strategy and tactics. “Why does marketing strategy matter? Because it saves you money.” Scaling In Built to Scale: Why Growth Entrepreneurs Need Structure, Dino Signore highlights this important topic. “Structure is like a well-written software code that enables your organization to reduce errors and run consistently.” Growth Hacking If you missed the third Growth Hackers Conference put on by Gagan Biyani and Erin Turner, here’s a pair of posts recapping the key points from it: Growth Hackers Conference 2013 A Detailed Bullet-Point Summary, and Growth Hackers Conference Recap and Slides. Competitive Analysis                  Steve Blank has a new way to depict a Company Competitive Analysis, using a “petal diagram” instead of the classical 2×2 matrix. By putting the startup at the center and linking it to the various market segments, this new visualization helps to get VCs excited about the opportunity to re-segment existing markets or create new ones. Entrepreneurship Fred Wilson posted a recent video interview of his partner Albert Wenger with me, where Albert covered the USV thesis, working with entrepreneurs, Tumblr, Foursquare, venture capital, and many other topics. SEO If you’d like to see the top 200 Google ranking factors in a wicked Infographic, here is a view on Every ingredient that contributes to search engine ranking. There is a method behind the Google search madness. That SUMs it up! Don’t forget to share on Twitter,  add us to your Feedly, forward to a friend, follow on Twitterread in Flipboard, or just visit the website often and daily. William Mougayar Founder & Chief Curator Startup Management]]>

Funding, Scaling-up, Talent, Venture Capital, Customer Acquisition, Advertising, SaaS, Entrepreneurship, Weekend Reading, Sept 22 2013

SUM on FB150This weekend’s Roundup #11 from Startup Management is a manual selection from the hundreds of weekly articles being curated. Previous issues are available here. There are 29 links in this edition. Forward to a friend, so they can sign-up and benefit too. Introducing Startup Management on Flipboard! If you are on Flipboard, you can read all the articles I’ve curated or written. It is updated in real-time. So far, 544 articles and counting. I add about 10 articles per day. Please subscribe on the web or via the App (iOS or Android) by clicking on the link. Hopefully, it will become a handy reference guide. I’m also a guest curator on Mattermark’s weekly newsletter, with a selection of Venture Capital oriented links. You can subscribe by clicking that link.

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