The Right Way to Think Competition in Startup Land
How do startups compete against large, established players? Learn about the strategies involved in startup warfare and why it's so important to give due respect to your competitors.
In the software startup space, competition can be daunting. Early-stage startups are like David facing Goliath; despite their obvious disadvantages, they often believe they're safe. However, early-stage companies usually overlook larger incumbents and fail to recognize the threat they pose. Similarly, larger companies tend to underestimate smaller startups by assuming they’re not a significant threat, which is a recipe for disaster.
Here's what I hear startups say about large competitors:
Their customers hate them
Their technology is terrible
They're too slow to react
Here's what I hear large companies say about startups:
It's only a piece of the whole solution
They can't scale
They won't be around for long
While both sides have valid points, it's important to acknowledge your competitors' strengths. Startups should recognize that larger companies have greater resources, know-how, and possibly even customer loyalty that can be difficult to break into. On the other hand, big companies must keep up with emerging technology trends and respond quickly to market changes.
It's essential for both startups and big companies to stay informed about their competitors. Focusing too much on one or the other can be a recipe for disaster because ignoring your competition could lead to missed opportunities, lack of market awareness, and potentially even failure down the line. The key is for both sides to remain agile, focused, and aware of who they are up against.
In Michael Porter’s Competitive Strategy book, he makes it clear that knowledge of rivals is essential for success: "Knowledge about rivals helps managers anticipate how rivals will react when a firm takes action; such knowledge also helps managers assess whether their strategy is better than rivals’ strategies."
In short, business success requires more than luck - it requires a deep understanding of your competitors and the ability to anticipate their next move. As Sun Tzu wrote in The Art of War: "If you know neither yourself nor your enemy you will always endanger yourself." Taking time to study your competitors and understand their strengths and weaknesses is essential for any business - regardless of its size or stage of development.