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Don’t get stuck playing Competitor Avoidance Twister

Let’s start with the obvious: it’s important to know about your competitors. Companies who confidently claim they never look at the competition are the Apples and Googles of the world – so dominant in their core markets that they become the de facto standard against which their competitors are measured.

Those companies are the exception, not the rule. When starting out, your product might have a chance of dominating the market in the same way, but it isn’t there yet. So don’t get complacent.

This post isn’t meant to be a reminder to do your homework. Rather, it’s about what to do once you’ve identified your competitors. Many founders, upon discovering they have competitors, tend to contort their offering in order to avoid being in a market with any competition. It’s like playing a game of Twister with your product.

The instinct to do this is a good one. Any economist will tell you having a monopoly can be wildly profitable. There’s also a certain sense of pride in knowing that you came up with an idea before anybody else. But playing Competitor Avoidance Twister, particularly in the early stages of your startup, leads to some crazy results.

For one thing, pivoting purely to put yourself in a currently untapped market is no guarantee of an easier path to profit. Sometimes a market is empty because it isn’t worth serving in the first place. PayPal’s original service was perfect for people who wanted to transfer money using their Palm Pilot; the trouble was there weren’t enough of them to make the service worthwhile.

The epilogue to that story is, of course, that pivoting can be key to success, but only if it’s done for the right reasons. A reactive, unnecessary pivot early on just sets you up for another pivot down the line.

You can’t always tell whether the new market you’re considering serving will be a gold mine or a dead end, but here’s a rough guide. If your competitor swerve takes you from a clear value proposition to a solution which takes 10 minutes to explain, you’ve probably made a wrong turn.

And that’s not an exaggeration – I’ve spoken to founders with an overly complex pitch who later explained they’d started out simple, but had to chop and change to avoid the competition. Worst of all, they were clearly much more passionate about their original idea than their knotty second attempt.

People focus a lot on the much-hyped first mover advantage, but they forget about the benefits of coming to the party a little later. One of my favourite chapters in Peter Thiel’s Zero to One is dedicated to the last mover advantage.

To me, the archetypal example is Google. Search was already a crowded market, full of better financed, higher profile companies when Google launched in the mid-90s. It succeeded because its competitors had already shown what didn’t work, giving Google the opening to provide a different, far superior search engine.

As Thiel says:

It would be very hard for anyone to do to Google what Google did to all the other search engine companies in the early 2000s.

Google didn’t need to hide from competitors because it had a significantly differentiated product. The difference wasn’t gimmicky – it wasn’t a dedicated search engine for cat pictures or something like that – and their value proposition was still clear: better, more relevant search results.

The danger isn’t competition in itself. The danger is competition when you have an undifferentiated product. No amount of twisting and turning can ensure someone won’t try to compete with you. That aspect of your startup is beyond your control. So instead, make sure your product is significantly differentiated from the alternatives.

That’s where doing your homework on your competitors can pay off, particularly at the beginning. If you notice the competition has a problem they can’t easily solve, then you’ve got an opening. By all means, tweak your marketing and feature set to take advantage of the situation, but there’s no need to freak out just because you’ve encountered an incumbent.

The biggest risk with obsessively avoiding competitors is ending up somewhere you don’t want to be, in a company you have no interest in running. That’s why games of Twister usually stop before someone hurts themselves.

Kit Kriewaldt is an entrepreneur and strategic communications specialist. He loves to talk James Bond, cocktails, and psychology – focusing particularly on decision making and consumer behaviour. He is also Chief Marketing Officer of digital communications platform Liquid State. Image credit: Fernando Mafra/Flickr

About Kit Kriewaldt

Kit Kriewaldt is an entrepreneur and strategic communications specialist. He loves to talk James Bond, cocktails, and psychology - particularly the topics of decision making and consumer behaviour. He is also former Chief Marketing Officer of digital communications platform Liquid State.