For many founders, starting a startup is the most stressful thing they do in their lifetime. I polled friends to identify the exact sources of that stress:
The stress of competition is the easiest to dispel because it's mostly an illusion. That's what I'll do in this post.
I've had more than one VC tell me they send this post to their founders as a form of therapy. So hopefully you'll sleep better after reading this.
Every startup I’ve run was haunted by three competitive concerns:
You can overcome these anxieties by understanding two things: you're not unique and retention is everything.
In the early stage of your business, your approach cannot be “We are unique.” Founders love telling themselves that — because it's the story they used to secure funding and hire their team.
Instead, imagine compressing the time horizon of your entire marketplace into a singular moment that your startup forever exists in. In this singularity, every new feature you release is instantly copied by everyone else. In other words, no individual product can become unique.
Consequently, your business only grows as the market itself does. This benefits both you and your competitors. In the long-run, you're working with them to increase overall demand for your collective offering.
Because of human population growth, this means that as long as your market is healthy, you'll never run out of new customers.
Once you’ve adopted this mindset, you cease to look at product development as a game of one-upping competitors. Instead, you see it as a more relaxed process of maintaining your status as a viable competitor.
That’s a much easier burden to bear: If you're perceptive of what your competitors are doing and if you have a competent team iterating your product, simply respond to trends on a reasonable timeline. You don't have to self-impose time pressure to release novel features. But don't sit idle either.
When you fear competition, you're actually fearing two specific things:
The latter — retention — is more important. You make no margins on users you no longer have.
Keeping customers is also more within your control: Observe how users use your product, talk with them, and react to their concerns appropriately.
Consider how much easier it is for startups to improve their customer retention by 20% (e.g. improve customer support and make features stickier) than it is to increase profit by 20% through greater ad spend.
Focusing on retention also fosters brand advocates. Brand advocates are lifetime users who don’t jump ship when a competitor introduces a great feature you haven’t implemented yet. Because when a competitor does release something game-changing, you simply respond with (1) the appropriate product development resources and (2) open communication with your users about your product roadmap. That’s it.
Once they see you're on track to have game-changing features too, you're fine.
And you have much more time to catch up than you think. Users don't disappear the instant a competitor one-ups you. Not even four weeks later. Not even three months later. Maybe a year later if you’ve utterly failed to respond to your changing market.
Ultimately, the greater the percentage of your users who are brand advocates, the stickier your business is, and the less you have to stress about competition blindsiding you with something novel.
And that’s a critical concept that entrepreneurs fearing competition fail to realize: Startups don’t die by being blindsided by competitors. They die slow deaths by not remaining competitive over the long-term. That should be tremendously comforting, because it means you no longer have to be on high alert for a competitor's movements. You just have to avoid burying your head in the sand for too long.
Appreciating that you always have work to do but never work you must do immediately affords you the peace of mind to enjoy work/life balance.
My favorite quote from Zero to One is, “All companies inherently have monopolies over their brands.”
Essentially, Airbnb will forever be the only “Airbnb.” Slack will forever be the only "Slack."
The goal of brand building is to refine your brand to the point where users would feel miserable if they had to deal with your competitor instead. Even if the competitor was materially better. You want users to feel like they would be replacing a part of their identity if they switched; they would cease to be "the guy who always wears Nike shoes" or "the girl with Slack stickers all over her laptop and desk."
Get your startup to the point where when a competitor adds an amazing feature, users say, "Damn, that's insanely cool! But... I'm just going to wait until [your business] offers this. Hopefully it's soon, but if they don't, I'll figure out a compromise."
MailChimp is an example of a strong brand. From visual identity to UX, they’ve mastered what it means to be a singular voice in a marketplace. When strong competitors arise, how many of MailChimp’s users do you think are going to jump ship in the short-term? Almost none.
Ultimately, effective entrepreneurs aren’t concerned about competition; effective entrepreneurs are concerned about users. They look inward, not outward.
Appreciate this and stop worrying so much about competition.
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