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Advice for When the Competition Starts Imitating You

When you start out building your business, it takes every ounce of energy you have to will your message out into the market with yet another SaaS product.  It’s like that feeling you get when you have to yell at a concert to the person standing right next to you just to get a word across.  As you gain traction, and then momentum, it’s not only easier to talk, but people are listening – many of them are even looking for you.  Turns out the competition was listening too and now they’re parroting you.  Before you let this become a distraction, let me tell you why this is the best thing that could happen to your business.

Avoid the feature parity arms race

In a previous piece on why feature parity is the enemy (a good primer for this post), I wrote about why it’s a mistake for startups to try and achieve feature parity with incumbents.  Seeking parity implies you’re trying to catch up to the competition.  In reality, your greatest chance of success is to widen the gap by identifying a tangential path to the status quo, thereby expanding your differentiation based on a unique insight or ‘secret’ that you believe to be true, yet others dismiss.

If you speak with any entrepreneur, they’d almost certainly agree with the statement that building a better version of the incumbent is a recipe for failure.  Taking the competition head on like that just gives them home court advantage in a game they’ve been playing for years.  Yet, I always find it surprising how hard it is for entrepreneurs to objectively evaluate their business through this lens.  Is your differentiation clear or are you stuck in the feature parity arms race?  When you’ve truly hit upon a pain point that resonates widely in the market from a unique angle, the game itself changes.

How to react when the competition copies you

So, you changed the game and the competition is now copying you.  Firstly, kudos on building a product differentiated enough to be worth copying – you’ve obviously hit upon something that resonates with the market because otherwise the competition wouldn’t be expending resources to try and reproduce your progress.  You now have home court advantage and all they have to go on is your game tape – they don’t have the playbook, so time to put your head back down, pull out the roadmap and keep widening that gap.  All the reasons why startups shouldn’t seek to emulate the competition apply doubly to incumbents copying startups.

The impact of this on your business

  1. Validates the space: Imitation is the sincerest form of flattery.  You of course believed you were onto something, but this external validation, no matter how poorly they execute, legitimizes your value proposition in the eyes of both customers and investors.
  2. Grows the market: The competition preaching your gospel is one of the highest orders of inception.  It helps grow the pie of buyers that appreciate this pain point and value proposition, which you have the leading product for.  It’s going to drive more inbound leads to your business.  That’s not to say you should sit on your hands waiting for people to realize you have the best product – their ears are just perked up a little more – you still have to go knock on all the doors.
  3. Turning the ship is hard: Incumbents carry a ton of baggage.  Their entire product infrastructure was built to deliver their core value proposition, not yours.  They can certainly put lipstick on the pig to generate some buzz, but actually optimizing for your use case is a ground up rebuild that they’re not going to do, or would take them years to implement, in which time you’ve widened the gap even further..
  4. They don’t have the roadmap: They’re aiming at where you were a year ago.  Just keep digging your moat – focus on your differentiation and by the time they get close, you’ll be an additional 10 steps ahead.  Moreover, what worked for you likely won’t work for them – each business is different.
  5. They’re distracted, not stupid: The more they’re focused on following you, the less they’re focused on building their own moat, but don’t get cocky.  As Dharmesh alluded to in a recent post on how to talk about competitors, try to give your competition more credit.  Is the gap between you relevant?  How difficult is it to overcome?  Your present advantage is likely time bound, so use that time to further build on your competitive advantage.

For all of these reasons, as an early stage startup, don’t waste your time thinking about competition much.  Pick your head up once in awhile to get your bearings straight, but frankly, you’re much more likely to die of self-inflicted wounds, e.g. buyer indifference, co-founder disputes, etc… than at the hand of any competitor.  Focus on solving your customer’s pain point relentlessly and the rest will fall into place.

Would love to hear other’s thoughts on how they think about the competition.

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