On Startup Competition

Worth a repost, for sure:

How much should an entrepreneur worry about competition in an early-stage startup?

The short answer is easy: Nada. Zip. Zero. Zilch. Spend none of your time  worrying about competition.

But, if that’s not enough for you… Jason shares a few more meta-levels on why this makes sense:

  • First, markets get redefined by new entrants that change the paradigm. Who saw that Zoom would rocket to $200m+ ARR in a crowded space that seemed to be a commodity going to free? Or that Slack would remake chat apps?
  • Second, it’s often ok to just be 10x better at something that matters a lot to paying customers. You don’t have to better than Salesforce at everything. You can be Pipedrive, and simply be the best CRM that’s super easy to use. That’s enough to get you to $100m ARR right there.
  • Third, super happy customers win. Yes, winner-takes-most is true in SaaS and frustrating. But if you are growing at a healthy clip and have super happy customers, you will probably still do fine. It’s almost impossible to kill a SaaS company at $10m in ARR with super happy customers. Those happy customers buy more and beget more customers. Even if your competitor is 3x larger.
  • Fourth, everybody lies. Be wary of your competitor’s press releases and fancy venture rounds. They matter. But everyone exaggerates a bit, and hides the tough stuff.
  • Fifth, competition is part of life. Very few spaces in B2B and SaaS in particular lend themselves to true monopolies. Instead of sweating competition — get good at it.

Love it. And… after having done this a few times myself I have the scar tissue to prove that worrying about competition does no one any good.

The greatest strengths of an early-stage company is nothing more than speed. If you can move faster than the rest, working harder and smarter than anyone who might be deemed a “competitor” then you’re already in a good spot.

But, that suggests that that even matters.

A good startup isn’t trying to compete. They are trying to annihilate the market and move towards a monopoly. Peter Thiel says this best in one of my favorite business books out there.

Own the space and you can become the “competition” that everyone is trying to beat.

Two great posts that appeared in my inbox this morning:


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