Competition is inevitable in every business. Corporate competitors such as Apple Inc. and Google Inc. are already successful, with millions of dollars to advertise their products’ superiority over that of their competition. But for startups it can be a lot harder to stand out from a competitor.
Take the case of Wesabe, a personal finance startup that shut down after Mint.com entered the space. Marc Hedlund, Wesabe’s co-founder, wrote on his blog that he was aware of companies working on similar ideas when he launched, but no one posed a real threat until Mint came along almost a year later.
“From that point forward we were considered in second place at best, and they overshadowed our site,” he wrote. “Two years later, Mint was acquired by Intuit. A bit less than a year later, Wesabe shut down.” He says his company may have launched first, but Mint had a better name and design, and provided a simpler experience for users.
In 2009, Toronto entrepreneurs Dave Senior and Josh Davey started working on a real-time photo-sharing app called Burstn. They soon learned about competitor Instagram and immediately started following their every move. “We knew we were in for a real competition,” he says. Within an hour of Instagram’s launch in 2010 they were No. 1 in the app store, and they were named Apple’s iPhone App of the Year in 2011.
Senior says he tried to outpace Instagram on product, but despite releasing features every month Burstn never went viral. Senior is no longer actively working on the company, and is now strategic director at creative agency Playground Inc. His advice to startups facing stiff competition is to understand how their competitor got to where they are today. “Don’t be naive about what it will take to compete with a big competitor. You need a great product, a great team, great investors, a great network of users and runway. And all those things have to come together to be greater than the sum of its parts.”
Daniel Patricio is preparing to go up against established competitors with his company Pinpoint Social, a social media promotion builder. He says looking at competition such as Strutta and Wildfire Interactive helps him understand his potential customers, but is only productive to a point. “If there is any opportunity in your market, you aren’t going to find it looking at your competitor’s solution,” he says. “We choose rather to spend our time talking to our customers, finding out their biggest pain point and the most elegant solution to it.”
Wesabe’s Hedlund says triumphing over your competitors isn’t about being first; it’s about making users happy. “A domain name doesn’t win you a market; launching second or fifth or 10th doesn’t lose you a market. You can’t blame your competitors or your board or the lack or excess of investment. Focus on what really matters: making users happy with your product as quickly as you can, and helping them as much as you can after that. If you do those better than anyone else out there you’ll win.”
– Erin Bury is director of content and communications at Sprouter. She’s always on the lookout for new business ideas. Get in touch on Twitter at @erinbury or by emailing firstname.lastname@example.org