It’s common knowledge that talking with users is the best way to understand a potential market for a new startup. Less known, but also valuable, is talking with investors who invest in the space. Maybe even less accepted is a third way…talking with competitors.
In this podcast an experienced founder describes why talking with your competition is hugely valuable. His main points...
Good markets have lots of competitors along with one or two established players.
The other startups in that space typically know and like each other. Usually “the enemy of your enemy is your friend."
It takes a very long time for a market to consolidate around new, disruptive players. Startups live-or-die over a year or two. Consolidation takes much longer.
Unseating the established player is easier/quicker if smaller startups help each other. If nothing else, these new entrants can help each other learn what new business model twists are working and not working.
Most spaces are not zero-sum games. Technology is still a small sector of the economy, so there can be more than one winner in any space.
I would add three other things...
Another reason why talking with competitors does (and should) happen is that competition doesn’t kill startups.
As part of the competitive set of companies to approach, I would also add founders who have tried and failed to launch startups in your space. These founders are typically even more open to talk because they put so much effort into their ideas and want to see it work (even if they aren’t the ones who do it).
I’ve heard that startups having a transparent, pay-it-forward attitude is because this is a common attitude among developers. I have no idea if this is true, but I’ve heard it a few times over the years.
My personal style with my own new startup ideas is to (a) get to know an industry extremely well and (b) spend my creative energies trying to figure-out the 10x better product. Talking with and learning from competitors (both past and present) might be the most important part of this process.
Get Right to the Lesson
I’d recommend listening to the entire thing, but to get right to the point go to minute 15:54 of this podcast.
Thanks to these folks for helping us all learn faster
Prayag Narula (@prayagn), co-founder & CEO of LeadGenius (@LeadGenius)
Y Combinator (@ycombinator)
Paul Graham (@paulg) of YC (@ycombinator)
Aaron Harris (@harris) of YC (@ycombinator)
Please let me and others know what you think about this topic
Email me privately at email@example.com or let's discuss publicly at @davempayne.
Real Founder Lessons
The best startup advice from experienced founders...one real-world lesson at a time.