Think about alternatives, not competitors

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First off, I'm a huge fan of Brian having worked with him at HubSpot. Thanks for posting and getting a discussion going, @EstebanJO

At Tettra we build an internal knowledge base. We always say that our number one competitors are either Google Docs, PDFs, or just outright apathy. That being said, we do come up against startup competitors all the time and have to be real about that. Getting into a feature way is annoying, but many people are savvy enough now to be able to easily research for multiple solutions and compare them all with a free trial. Everyone says "ignore the competition", but that is pretty much impossible nowadays.

Here's my advice for how we handle thinking competition:
- Never copy the competition. Chances are, they are guessing just as much as you are. If you straight up copy their features, positioning, etc., you're likely just copying something that's wrong. Instead, always dig in with actual customers or prospects on what their needs are, then solve the problem your way. If what the competition has done is the best way, so be it. But it's often not and you can find a better way.
- Know what you want. Most software markets are much larger than their current size. If your goal is to build an indie business and have financial freedom, then you don't have to capture the entire market. You really only need a sliver of it to build a meaningful, impactful business nowadays. Don't fall into the "winner take all" investor trap. Whenever I get into an anxiety fueled spiral thinking that "we're losing! 🤬" I always just remind myself we don't need to "win it all" in order for us, our team, and our customers to win.
- Know who your target customer is and relentlessly focus it down. When I was at HubSpot, there were multiple billion (yes, with a B) dollar companies all doing the same thing, but for different marketers. Mailchimp was focused on very small businesses, HubSpot's sweet spot was mid market (20-2000), and Marketo/Pardot went for the enterprise. There was space for everyone. If you haven't read April Dunford's book, Obviously Awesome, on product positioning yet, then you should.
Anyways, just some ramblings from a (now relatively old) SaaS guy. Hope it's helpful.
andygcook

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6 years ago
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  @andygcook I agree, this is all good advice.
  
  "That being said, we do come up against startup competitors all the time and have to be real about that. Getting into a feature way is annoying, but many people are savvy enough now to be able to easily research for multiple solutions"
  
  IMO, trying to win this conversation is not a high ROI use of a startups energy. You have to change the conversation. Play a different game.
  
  In the early days of HubSpot, the convo wasn't "here is why we are better feature for feature compared to Xyz company." The convo was pivoted to, we are an all in one solution for the inbound methodology. That changes the playing field. Changes the alternative as well. Those two might sound similar, but are very different.
  
  "Everyone says "ignore the competition", but that is pretty much impossible nowadays."
  
  To clarify, I am not saying that. It is good to be aware. I think most people spend more energy on competition vs alternatives to your points. It is like some weird gravitational force. Everyone, even the best, fall into it. Its why every damn SaaS website looks exactly the same!
  
  EDIT: I always forget to contextualize my advice. Most of my advice is for those that are trying to build venture scale companies. I realize that a lot of people in this community are not trying to do that (which is great btw).
  
  bbalfour
  
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  6 years ago
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  @andygcook how do you deal with competing in a red ocean? Competition is real, especially when there are multiple tools in the category. I'm asking because I'm starting to build something in a crowded space. Of course, I think I can do it better (at least for a segment of the market), but you can't ignore the reality that there are a dozen options.
  
  v1l
  
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  6 years ago
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  Thanks for sharing this @andygcook!
  
  When you say,
  
  Most software markets are much larger than their current size.
  
  Do you mean that most markets are much larger than the size you're able to see?
  
  IdentityTensor
  
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  6 years ago
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Yes, that's true. Therefore, build a better product, focus on your customers and let the competition behind.

random_user

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6 years ago
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This comment was deleted 5 years ago

DeletedUser

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6 years ago
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  I'll rephrase. Docusign's PRIMARY competitor was not HelloSign and others. Most of their customers were switching from pen and ink, not the other solutions. Now, today in a very mature market they have more people switching from other e-sig solutions, but that's many years later.
  
  If you are a startup, and the start of all your convos is why you are better than some other direct competitor, you are in a red ocean and your chances of getting it out of it are slim to none.
  
  bbalfour
  
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  6 years ago
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