I advised them to do more competitive landscape research and to make sure they were close to people who could bring them to groups of “real” users ready to do pilot projects.
A few days ago I received the below message from one of founders. (I have altered the details enough to preserve confidentiality).
“ Hi Richard
I’ve a difficult question and I don’t know the answer so I thought there would be no harm in asking for advice. Taking your previous advice we are doing competition research and yesterday we have found this https://www.fundedcompetitor.co.uk . This startup provides an app which has functionality is exactly like the product we wanted to create.
Only difference is UI design. They are really early stage but they have good looking and well working IOS MVP ready to download, a few good clients, partners, and investment https://angel.co/fundedcompetitor.com
we know the most often one company don’t fill up a market gap but I would like to ask how should we approach this to take advantage from this situation
The question if it is worth it to stay with this idea or just take advantage of the fact that my team didn’t lose too much time on things that are only specific for this problem. Most of what we have done can easily generalise to AI app which involve computer vision. So maybe on the other side it’s good plan to just rethink what we want to create? I thought it would be best to ask you for advice in this case. I have to admit that it scares me a bit to compete with a founder with 12 years of experience with exactly the same product already working.
I decide to go into Proseed mode, and publish my thoughts. and this is my reply
Certainly you shouldn’t automatically give up for this reason.It’s not obvious that finding a competitor who is ahead of you is a disaster. Maybe their existence shows that your idea is worth while.
It suggests that other people agree with your team that there is a problem worth solving – especially since the person/team behind the rival project seem to be serious players.
I looked at their website and App. Are you sure they have clients? They don’t talk about their on their website and while there are major industry players present in their App it’s not obvious they have agreements with them either.
The are many benefits of having a competitor. These include:
- You can learn from them
- You can benchmark against them.
- You can follow/stalk their team on Linkedin, seeing what talks and interviews they give. Maybe they will quit or be fired, and you can talk to them.
Track changes on their web site using a tool like one of these and make a Google News Alert to send you news about their business. You should analyse every change – and try to understand the possible reasons
Make are note of who funded them (if they have funding) on Angel list and follow them. Maybe they will invest in you too
Have a trusted friend sign up as a user/customer and update you,
Keep records/notes and screen shots of all their marketing, communications, including
what is good,
what is bad
what could be done better.
If you need to talk to investors for your project the fact that someone else invested in them, a similar business – is a strong validation that your idea can make sense, especially if they are doing well.
Look carefully at their sales and marketing process.
Figure out how they get sales leads and how they manage them. Maybe you can learn from them, maybe you can do better.
For sure you can expect that they will be working to educate the market which may be to your advantage if you have a better product.
You should aim to understand their business model. Make a judgement about whether it is successful, optimised and should be copied or avoided.
If you ever get a chance to meet people the competitor organisation, say “hello”, be positive and friendly. Less experienced business people often regard competitors as some people to be avoided (and at one level they obviously can be a threat). This is usually a mistake. You have far more in common with competitors than with most other businesses. There may be areas where you can work together – representing common positions to government and regulators, or joint efforts to work with local universities. It’s good to be friends with people in your industry if you can, though it is not always possible. You of course need to be careful to make sure you and your team discuss and decide what is confidential and should not be shared.
Potential exit or jobs (acqui-hire)
It could be that your competitors would love you to work for them as members of their tea,. If you haven’t yet got a well paying job, this could be a better way to get a job than most. You get some cash for handing over your technology and company, and an employment or consulting contract. Be careful about your internal team dynamics if you are considering this. It can be risky. You may lose your best people, who jump ship to the competitor, while the majority of people are left in your failing startup.
If you don’t think you are going to catch up it is worth asking the competitor if they might be interested in talking about this route.
Don’t over analyse
Many entrepreneurs pay far too much attention to competitors and not nearly enough to customers and potential customers. The only opinion that really matters in the long run is that of people and organisations whose problems your business exists to solve.
As you consider how to compete with them, be careful not to assume that the way to beat them is to be cheaper. Pricing and value for money are always important. More important than being cheap is making sure that you are the company that offers the best solution, and product. There are almost no markets where the cheapest is the best, and whether we think of cars, phones, consulting, housing, or whatever.
Apply common sense – if your competitors have more money, better products, happier clients, cleverer people, and you can’t see a way to catch up, maybe you should just congratulate them and look for your next project. Always be honest with yourself.