1. Home
  2. Business Planning & Strategy
  3. Competition
Searching...

Competition

Key Questions

  • How can I determine who my real competitors are?
  • How much should I worry about competition?
  • What types of competitors are most dangerous?
  • How can I think about future competition, including new startups?
  • How can I determine how to best position myself vs my competition?
  • When should I copy competitors and when should I differentiate from them?
  • What are common ways to differentiate from competitors?
  • I’m losing customers to a competitor – how can I respond?
  • Should I talk about competitors in sales conversations?

Worksheets

Start Here

Alex Taussig: How to Stand out From Your Competition

(5 min read.) Alex emphasizes the importance of differentiating your startup from competitors by focusing on unique value propositions rather than just being better, faster, or cheaper. He advises finding a differentiation that competitors would agree with and inadvertently reinforce. Taussig uses the following examples to make his point; HotelTonight positioned itself for last-minute bookings rather than competing on price like Priceline, attracting spontaneous and luxury-seeking users. Zola differentiated itself from traditional registries by offering a wider selection and superior customer service. Stitch Fix marketed its simplicity and convenience over Nordstrom’s in-depth personal styling. Taussig concludes that being different in a way competitors highlight is more effective than merely being better.

Myk Pono: How to Conduct a Comprehensive Competitive Analysis

(23 min read.) Here, Myk stresses the importance of understanding both direct and indirect competition, leveraging insights to assess opportunities and threats, and adjusting positioning strategies accordingly. The guide outlines the process in four parts, covering the basics of competitive analysis, how to select competitors for analysis, detailed steps to conduct the analysis, and next steps including the creation of competitor battlecards. According to Myk, this strategic tool helps businesses navigate the complex SaaS landscape and differentiate themselves effectively.

Learn More

Reid Hoffman: Choosing Bad Competition

(45 min listen.) Reid argues that a startup could find success by looking for a high-value market with bad competition rather than a low-value market with no competition. Using Elon Musk, Richard Branson, and himself as examples, Reid makes the point that all bad competition boils down to a fundamental inability to recognize change. He lists three types of bad competition: lazy (in an intellectual sense), unable to recognize new opportunities in an overlooked industry, and hung up on the status quo. 

Hiten Shah: Copycat Your Competitors to Take the Market 

(8 min read.) Hiten discusses how startups can strategically use copycatting to gain a competitive edge in the market. He explains that copying successful features from competitors can help startups innovate quickly and effectively. Shah uses Amplitude’s strategy of offering Mixpanel’s services for free as an example. He outlines two primary strategies: copying to shrink the market and copying to consolidate the market. However, Shah emphasizes the importance of maintaining ethical standards while doing so. Additionally, he advises founders to stay focused on customer needs, citing MailChimp and Intercom as examples of companies that successfully navigated competitive pressures by innovating within their business models.

Sophia Amoruso: Outrun the Competition

(2 min read.) Sophia discusses the inevitability and benefits of competition in business, emphasizing its role in driving innovation. She advises entrepreneurs to leverage competitors’ weaknesses and improve existing solutions rather than merely replicating them. Amoruso advocates for a unique approach, citing her strategy of studying competitors to differentiate her offerings effectively. She encourages entrepreneurs to identify common complaints or shortcomings in their market and innovate solutions that add unique value, rather than just following existing practices.

Drew Houston: Should You Worry About Competition

(4 min video.) Drew discusses the challenges of competing with large internet companies, cautioning against overestimating external competition. He points out historical examples like Netscape and Myspace, suggesting that internal issues often pose greater risks than external threats. Houston emphasizes the critical importance of hiring talented individuals and maintaining focus to avoid distractions. In his analysis, Houston underscores the difficulty of maintaining success amidst rapid company growth, likening it to baking a cake in a rush where mistakes are inevitable and some errors cannot be fixed later. Additionally, he warns against the pitfalls of losing focus and chasing too many opportunities, citing cases where promising companies faltered due to such distractions. 

Brad Feld: Use Your Competitors’ Products All The Time

(2 min read.) Brad Feld stresses the crucial practice of regularly using competitors’ products to gain profound insights into market dynamics and differentiate strategies effectively. During discussions with founders of a funded company, Feld highlighted how actively engaging with competing products helped shape innovative pricing and go-to-market strategies. By focusing on product functionalities and limitations rather than company profiles, they developed a strategy to establish a unique market position. This approach enabled them to leverage fundamental architectural differences in their own product and align pricing strategies accordingly, fostering a competitive edge in the market.

Peter Thiel: Competition Is for Losers

(27 min video.) In this video Peter Thiel, co-founder of PayPal and prominent venture capitalist, argues that for startups, aiming for monopoly rather than competing in crowded markets is crucial. He emphasizes creating unique value propositions that allow companies to dominate their sectors, contrasting this strategy with industries like Hollywood and airlines, which face intense competition and lower profitability. Thiel highlights the long-term advantages of monopolistic tech companies like Google, attributing their success to proprietary technology and network effects, which secure their market dominance despite initial challenges in profitability. 

Roger Martin: Strategy & Competitors

(7 min read.) In this article, Martin explores the importance of focusing on competitors within business strategy. He discusses two contrasting approaches through his experiences with leading clients who largely ignored their competitors. Martin argues that while focusing solely on competitors can lead to unproductive imitation and convergence, completely disregarding them is also risky. Instead, he advocates for a balanced approach, suggesting that businesses should be aware of competitors to infer insights and make distinctive advancements, rather than just copying. Martin emphasizes using competitor actions as a tool to spur innovation and maintain leadership without becoming fixated on them.

Jensen Huang: Setting Prices, Evaluating Opportunities

(3 min video.) Huang discusses the dynamics of competition and resource allocation in the context of building game consoles, emphasizing that competition, not the market, sets prices. He shares insights on making economic decisions, highlighting the challenge when both a company and its competitor are keen on a similar project. Huang stresses the importance of understanding what the scarce resource is—in this case, the time of exceptional engineers. He explains the role of a manager as one who allocates these finite resources to maximize returns, considering both direct costs and opportunity costs. This approach dictates whether or not to engage in a project based on its economic viability.

Arun Suresh: The Right Way to Do a Competitor Analysis for a New Product Category

(5 min read.) Suresh critiques traditional competitor analysis methods in his guide for startups, pointing out their lack of focus on actual customer value and problem-solving capability. He introduces the “jobs-to-be-done” (JTBD) theory, which centers analysis around the tasks customers need to accomplish, rather than just comparing product features. Suresh argues that this approach not only helps startups understand their unique value proposition better but also enables them to identify potential areas for product improvement and extension by benchmarking against both direct competitors and alternative solutions. This method provides a more comprehensive view of the competitive landscape and customer needs.

Andy Crestodina: 16 Top Competitor Analysis Tools for 2024

(15 min read.) Crestodina offers an overview of 16 competitor analysis tools useful for digital strategists and marketers. He emphasizes the importance of these tools in providing insights beyond what can be directly observed, such as search optimization, digital advertising, social media, traffic, and technology.restodina advocates for using these tools not just to keep up with competitors but to uncover opportunities to enhance one’s own digital marketing strategies effectively.

India White: How to Take an Audience-First Approach to Competitive Analysis

(5 min read.) White emphasizes the importance of an audience-first approach in competitive analysis over traditional brand-centric metrics. She critiques the reliance on vanity metrics like followers and likes, which often lack contextual value. Using a case study with productivity tools like Trello, Evernote, and Asana, White illustrates how understanding the composition and interests of an audience can provide deeper insights into competitive positioning. She introduces Affinio’s algorithm, which segments followers into interest-based communities, revealing which competitors truly lead in engaging key demographics. This method allows businesses to focus on meaningful engagement and tailor their strategies effectively.

Caroline Forsey: SWOT Analysis: How to Do One [With Template & Examples]

(15 min read.) Forsey details the importance of conducting a SWOT analysis for strategic business planning. SWOT, which stands for Strengths, Weaknesses, Opportunities, and Threats, is a framework that helps businesses identify internal capabilities and external possibilities that can affect growth and success. Forsey emphasizes that while SWOT analysis might seem straightforward, it forces businesses to critically assess various aspects of operations and strategies. The article outlines how to effectively perform a SWOT analysis by understanding and documenting these elements, providing templates and examples to illustrate practical applications, such as Apple and Starbucks, demonstrating its versatility in various business contexts.

Denis Oakley: Business Model Competitors Analysis

(7 min read.) Oakley discusses the strategic importance of analyzing competitors’ business models in addition to traditional SWOT analyses. He highlights that understanding competitors’ business models can provide deeper insights and lead to more impactful business strategies. Oakley advocates for using a business model canvas to map out competitors’ strategies, which can reveal shared weaknesses and opportunities for disruption. He emphasizes that a successful new business model should not only accelerate the company’s value proposition but also disrupt competitors’ models to prevent them from easily countering the innovation. Oakley uses examples like Tesla to illustrate how companies can significantly benefit from rethinking their competitive strategies through this lens.

Steven Morley: How To Do Competitor Analysis for Your Startup

(50 min video.) Morley, emphasizes the critical role of competitor analysis in launching and growing a successful startup. In his presentation, he discusses not just the importance of understanding direct competitors, but also indirect and potential future competitors. Morley advises startups to look beyond simply outperforming competitors and focus on understanding and fulfilling the needs, hopes, and fears of their target market. He introduces the concept of thinking about competition in terms of “alternatives” rather than direct threats, suggesting that the goal is to offer a better solution than existing alternatives. His approach underlines the need for startups to position themselves effectively within the competitive landscape by leveraging unique insights gained from analyzing both current market conditions and competitor strategies.

Steve Barsh: How to Create a Killer Competition Slide for VC Investors 

(5 min video.) Steve discusses common pitfalls startups face when analyzing competition and how to effectively present competitive analysis to investors. He stresses the importance of deeply understanding the competitive landscape, cautioning against underestimating this aspect as it could lead to critical oversights. Barsh criticizes common tools like magic quadrants and Venn diagrams for being overly simplistic. Instead, he recommends using a detailed table format to highlight your startup’s unique benefits and differentiators clearly. According to him, this method helps startups articulate their unique position in the market by focusing on quantifiable benefits and streamlined, impactful communication on competition slides designed for venture capital pitches.

Tomasz Tunguz: Your Startup’s Competitive Advantage

(3 min read.) Tunguz discusses the importance of focusing on a startup’s competitive advantage to ensure its survival and success. He outlines five primary categories where competitive advantages can emerge: product, cost, positioning, distribution, and execution. Product innovations, while potentially replicable, provide a significant edge by offering superior functionality or user experience. Cost advantages often stem from economies of scale, particularly relevant in hardware or manufacturing sectors. Positioning, including premium branding or category creation, plays a crucial role in distinguishing a startup from its competitors. Distribution strategies that uniquely position products in the market can create formidable barriers for competitors. Lastly, executional excellence, especially when the team has unique qualifications or insights, can be a critical differentiator. Tunguz advises startups to concentrate on one or two areas aligned with their strengths to build a sustainable competitive advantage, rather than diluting efforts across too many fronts.

Alfred Lin: Customer Obsession vs. Competitor Awareness

(3 min read.) Alfred reflects on Amazon’s strategic focus on being customer-obsessed, a philosophy emphasized by Bezos. Despite this focus, Lin shares insights from his time at Zappos, revealing Amazon’s meticulous competitor analysis. He describes how Amazon used scripts to analyze Zappos’ inventory and pricing, suggesting a significant level of competitor awareness. Lin criticizes benchmarking as merely directional and insufficient for defining winning strategies or fostering innovation. However, he acknowledges the value of learning from competitors’ best practices. This approach of blending customer obsession with competitor awareness helps companies stay innovative and maintain leadership in their industry, according to Lin.

Chris Dixon: Competition is Overrated

(3 min read.) Chris emphasizes that startups should focus less on existing competitors and more on understanding and executing their unique value proposition. He argues that discovering similar products already on the market can be a positive sign, indicating the viability and demand for an idea. Chris encourages founders to learn from past market attempts and to pinpoint why previous endeavors failed, whether due to poor execution or premature timing. Startups, he contends, battle mostly against potential customers’ indifference and lack of awareness, not directly against each other. This perspective shifts the focus from competition to innovation and effective market entry strategies.