The Downside of Using Your Competition In A Startup Strategy

Yes, it’s a focus thing.

I love to compete. I love having a target. I love using an underdog status to focus my attention. Identifying the competition can be a very useful tool in business building. I think it is best used when you are scaling your business. But, there are significant reasons not to use an anti-competition strategy as a startup. Here’s why.

Leading startup experts now encourage founders to undertake more of a customer development schema than a product development schema. I have done both and without a doubt, I enjoy the new customer first methodology.

I used to take a product first strategy. It seemed much simpler back then. Conceive a product idea, figure out how to build it out, and then bring it to market through sales and marketing. This strategy was based on our ability to secure enough funding for product build out.

There used to be money for great product ideas. Not any more. Now savvy investors want to see some product validation or traction before they give you money.

Customer development relies on a systematic approach to uncovering what your target customers need and how they want to consume your new product. In this rollout strategy, great founders find inexpensive ways to prototype a product, measure the engagement with a targeted niche group then learn how to iterate through that process again and again.

So where does competitive strategy fit in?

The old methodology of building out your product first relies on a keen understanding of what your competition is doing and identifying areas where you can be different including alternative features, alternative business models, and alternative distribution platforms.

For today’s startups that are using a customer first methodology where my focus is on completely revealing their issues, I care a whole lot less what the competition is doing. In this scenario, I may be aware but not singularly motivated.

Net/net, put a lot more time in understanding your customers and less time analyzing your potential competitors and you will create many more opportunities for your new company.

Speaker, investor, mentor, startup founder. One of 3 or 4 Co-Founders of MapQuest (sold to AOL for $1.2B). Managing Director of $25M Venture Fund in late 90's. CEO, COO or President of various companies ranging from $200k to $20M in size. One of two Managing Directors of The Startup Factory (35 investments across 7 cohorts), founder and MC of the Big Top Reverse Job Fair and national writer and speaker waxing poetic around startups and startup communities. Currently EIR @ Techstars with Brad Feld ~ Startup Communities, to help community leaders around the world grow their startup community.

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