The traditional competition between companies has been about the price and quality of their products. For most startups that haven’t reached product-market fit, that shouldn’t be a real concern. As Justin Kan puts it:
Startups mostly don’t compete against each other, they compete against no one giving a shit
— Justin Kan (@justinkan) June 27, 2015
But why and how do startups compete against no one giving a shit? For one, starting a company has never been easier so there are lots of them. “I am the founder of a startup” says little about a random person you meet in Silicon Valley. Imagine that Wimbledon expanded from 128 to 65,536 players. More people would be able to say “I played at Wimbledon” but the average participant would not have a sponsor or be able to make a living as a tennis player. As this “Wimbledon expansion” slowly took place, the traditional competition moved to a later stage. In the beginning, startups compete against other businesses in areas such as:
- attention. Because there are more products and services that ever before, there is a significant chance that nobody will learn about what you’re doing. In that sense they don’t compete just against other startups or large companies; they compete with the background noise of the online world that all of us generate.
- employees. If your startup makes backup cameras for bicycles (“parallel parking your bike is now easier than ever with BikeSeatCam!“), you want to hire the people lots of other companies in completely unrelated markets also look after.
- funding. That’s perhaps the closest thing to a startup league competition. Investors must decide where to put their money, and often choose among startups that are unaware of each other’s existence. Still, this is the fiercest competition most startups will face. You can study the weaknesses of a specific opponent and perhaps exploit them, but when competing against the faceless crowd there are no shortcuts: you must be significantly better than most.
- customers. That comes after surviving the other types of competition long enough to have a product out in a validated market. Most startups will never have the luxury of reaching this stage.
Many founders I’ve met have a hard time understanding the nature of this competition, and adjusting their thinking to compete in those terms. For example:
- Getting attention is an art, and many underestimate how important it is. If you’re doing something wacky (“our drones keep your cellphone in front of your face so you can watch Netflix while you jog outside!”) or controversial (e.g. Peeple this week), attention comes more easily. If your product is relatively boring, you’ll have to figure out how to get the attention you need.
- Attracting employees is a multidimensional task: some people are lured by the promise of working with known industry figures, some want to take on a sexy project, others value the potential of the business. What you have to do to attract the right employees may be unrelated with the nature of your business. For example, your customers may not care at all about your software stack but your potential employees will obviously prefer some tools over others. Is there anything that makes your company a unique place to work?
- Fundraising is literally selling. A startup is selling a part of itself in exchange for funds to operate. Investors are people who buy investments in the same way that consumers buy daily necessities. Even though this is obvious, I keep meeting startup founders who believe that investors are like their rich uncles. In reality, investors are more like shoppers in a giant grocery store filled with unknown stuff: should I buy some gluten-free Twitter substitute or try the “I can’t believe it’s not Uber” instead?
If you’re reading this post you’ve probably heard the YCombinator mantra “make something people want.” Even though it has a zen-like air of wisdom, I find it as actionable as “score more points than your opponent.” There are countless reasons making something people want is really hard. One of them is that if you startup cannot rise above the background noise and get the right amount of attention, it will never find out if it’s on the right track. For startups, loudness is a virtue.