December 6, 2013

Startup founders have so much invested in their company that it can cloud the way they think about competition. Sometimes you can be too paranoid and get way too focused on competitors, to the point that they cause you to take your eye off the ball. In other cases, you can be so focused on what you are doing that you can be blind to your competitors and fail to respond when they start doing things that are pretty smart that you should be learning from.

One of my biggest pet peeves when speaking with entrepreneurs about their business is the way some talk about their competition. Specifically, I get annoyed by entrepreneurs who are overly dismissive of their competitors.  You don’t need to go through a laundry list of competitors, but there is almost certainly at least  1 or 2 that are going to pose a formidable threat in some meaningful way.  Personally, I appreciate entrepreneurs that are thoughtful about competition, and will speak fairly deeply about the small number of companies (large or small) that are really potential threats to their success.  I prefer a vibe that goes something like:

“These guys are good. Here’s how we are different and why we think we will win. But they’ve make some really smart choices too.  I look forward to competing against them.”

This is way harder said than done. Responding to competition is highly emotional. Trust me, we experience this too.When a competitor comes onto the scene, or makes an interesting move, it’s easy to experience a wide range of strong emotions:

  • Admiration “why didn’t I think of that?”
  • Envy “crap, I did think of that, they just beat us to it”
  • Dismissiveness “They have no idea what they are doing.  What a dumb strategy”
  • Denial. “They aren’t really competitors”
  • Aggression. “We’re going to crush them”
  • on and on and on…

It’s not easy to have a balanced view of competition. But I think it’s pretty critical. You need to be aware of competitors, and have an honest appreciation for that they are doing and what it might mean.  Then you have to decide whether it changes your plans or not.  Then you have to forget about them for a while, and focus on great execution and playing your own game to the best of your ability. Not as easy as it sounds.

  • Semil Shah

    Nicely stated. For me, this comes down to the ability to maturely identify, classify, and communicate risk — for example, the founders who will create a slide in their deck called “Risks” or “Unknowns” and be willing to have a cool conversation about it. That tells a lot.

    • robchogo

      Yeah, I totally agree. Some entrepreneurs though just list out ideas to fill the page. It comes down to the 1 or 2 real risks that will really matter, and having a serious discussion about them.

    • falicon

      I think it’s also important to understand the size and direction of the market…is it big enough for all or is it a winner takes all situation? Is the market growing or contracting? These sorts of things really play into just how heated the competition really needs to be…

      • Semil Shah

        Sometimes “size of market” discussions aren’t necessary or relevant. Sometimes, products/teams end up creating or disrupting markets.

  • JJ

    I’ve heard a number of entrepreneurs say (and read about a number of others) who are proud to say, ‘we have no competitors’ or ‘we’re inventing this space’ or ‘we’re the first people here.’ In all those cases, even if they are true, there is still some competition – ie status quo bias. Just as importantly, they frequently aren’t true. There is almost always some company that overlaps with at least part of what you are doing.
    BTW, I am not in the startup world anymore, but I really like your and your partners writing. I believe there is still a lot I can learn from it.

    • robchogo

      Thanks, and I totally agree!

  • William Mougayar

    And what you think is competition may not be competition, especially in the early stages.

    But if a customer tells me “they are competition”, then that’s a strong signal.

    The good old fashioned way to handle the competition is to know how to sell against them. Know your strengths and know their weaknesses. And for each competitor, you take a different approach to selling agains them, accordingly.

  • Marcos Moralez

    “Then you have to forget about them for a while” <– This is advice is key, I consider it a must-do! Early in my career there were many times when I've built a product to solve a problem and "watched" my competitors closely this can quickly kill your passion.

    Stick with your game plan and focus (assuming that you have strong differential value built into your game plan of course :)

    • robchogo


  • Scott Barnett

    I never understand when a company trashes their competition and customers that don’t choose their product. It’s obviously a defense mechanism, and I can’t imagine how anybody can’t realize it isn’t helping them. From your perspective, I assume it just shows a delicate ego on the part of the founder/exec which is something to avoid. I just blogged 2 weeks ago about a personal experience at a startup which hits your nail firmly on the head –

  • Dennis R. Mortensen

    I am personally a fan of finding a Nemesis early on – it’s such
    a strong tool for building a great culture!

  • Alex Capecelatro

    Just an FYI, “made” not “make? — “But they’ve make some really smart choices too.”

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