When asked about competition, startup founders typically fall into two camps.
- We have no competition
- We are better than the competition
Within the first camp, some founders genuinely believe this to be true while others only pretend to believe it.
The founders that genuinely believe they have no competition do so because they manage to convince themselves that they have built something so innovative and disruptive — that there is no competition.
As we’ll see shortly, this is a fallacy.
No matter how disruptive or innovative the product, every successful product in the world always has competition when it enters the market.
Founders who pretend to have no competition do so because they don’t want to publicly acknowledge that the competition exists. In a product pitch, for instance, they leave out the competition because they don’t want to tip off or steer their prospects to them. This, too, is a mistake because sophisticated customers will comparison-shop anyway.
And when they do so without the founders in the room, the founders have no influence over how the comparison is made which puts them at a disadvantage. This brings us to the first counter-intuitive insight:
“Stronger positioning comes from anchoring against the competition, not by pretending they don’t exist.”
So, between these two camps, the “we are better” camp is the better path.
That said, communicating better has its set of pitfalls, too.
When communicating better, founders often rely on either trying to convey that they have more features or better features, and some try to do both.
A popular way to convey more features is with a feature chart like this one, where you list all your features over the competition.
The first obvious problem with taking on more features is that it increases the scope of what you need to build. When you are first launching an MVP, this increases both your time and money investment.
Next, not all features are equal. Communicating too many benefits at once dilutes your unique value proposition, which can get lost in the noise.
However, by far the most common pitfall I see here is comparing your product to the wrong competitors.
Many startups think they are competing with other startups that look like them.
They anchor and position against these other startups, but if no one or not enough people are using them, they aren’t your true competition.
These startups could be just as clueless as you are, and when you anchor and position against them, and move at a hundred miles an hour in a different direction, you could still drive your startup off a cliff.
For example, say you’re building collaboration or analytics software. Your true competition may not be another high-tech startup but an email or a spreadsheet.
Email and spreadsheets are free and ubiquitous, but they aren’t often listed as competitors on the feature matrix.
So what about conveying better features?
A popular way to convey better is to use a 2x2 feature quadrant like this one:
This where you pick two axes and show that your product is in the top right quadrant. While this is certainly an effective way of visualizing your difference, the real question is whether this difference matters to your customers. If it doesn’t matter to them, then it doesn’t matter.
This brings us to the next insight.
Your MVP is all about balancing the tradeoff between minimum scope and maximum value.
In order to build something fast you have to think minimum feature set, and in order to build something that grabs your customers’ attention, you have to think maximum value.
So how do you do this?
By getting yourself out of the solution-context trap.
Here’s how that happens: When you get hit with an awesome idea, it’s tempting to quickly formulate a possible solution and ask, ”What problem can I solve with this solution?”
This triggers the hammer problem:
When you’ve already decided to build a hammer, everything starts looking like a nail.
This is when you either start believing that just because nobody else is building hammers, you have no competition,
or you start positioning your hammer as a better hammer because it’s bigger or heavier or something else.
Don’t worry—this happens to everyone. I still struggle with this constantly, which is why I even gave it a name: “The Innovator’s Bias.”
Like any bias, the best way to address it isn’t by trying to avoid it, because biases work at an unconscious level. The best way to address a cognitive bias is by devising tripwires to detect them and thinking processes to overcome them. I devised such an antidote to The Innovator’s Bias - something I call The Innovator’s Gift.
What is the Innovator's Gift?
The basic premise behind the Innovator’s Gift is simple.
New problems worth solving come from old solutions.
In other words, when you’re trying to build something new and innovative, sure you need an innovative solution, but you don’t want an innovative problem.
An innovative problem is one that your customers either don’t know they have or that requires extensive explanation. Instead, you want to address a visceral problem that your customers regularly feel, know, and struggle with.
Think back to any successful product:
- Before there was ride-sharing, there were taxis,
- Before we stayed in Airbnbs, we hired hotels,
- Before we drove cars, we used horse-drawn carriages.
Do you see the common thread here?
Every new solution had a predecessor (old solution). And the reason the new solution got adopted wasn’t because it solved a new problem but an old one:
- Ordering a taxi over the phone was painful,
- Where do you stay when all hotels are sold out?
- Horse-drawn carriages weren’t fast enough and big cities were literally filthy with piles and piles of horse manure.
The best way to uncover these types of problems isn’t asking: what problem can I solve with my solution but rather what’s broken with existing alternatives.
This is precisely why you won’t find a competitors box on my 1-page business modeling tool: Lean Canvas but instead an existing alternatives box.
When people think of competition, they often think about products in the same category.
But when you think more generally about existing alternatives, you transcend category.
This is how you move from the solution context to the bigger context.
How to apply the Innovator's Gift to Strengthen Your Positioning
There are three tenets in The Innovator’s Gift.
You’ve seen the first one already: New problems come from old solutions.
The implication here is that there is always an old way.
For those of you who believe you have no competition, this is a foundational tenet that you must reconcile and internalize first to effectively apply the Innovator’s Gift.
Even if you believe this to be true of your product, I’d encourage you to challenge this statement as a universal truth and try to find an exception to this rule.
Can you think of any product at any time in history that was so disruptive or innovative that it had no competition or existing alternative?
If you can find one or more products, leave a comment below.
Based on your responses, I’ll create a follow-up video to address each one.
Once you’re onboard with the first tenet, the next two flow quite easily.
The next tenet in the Innovator’s gift is that all innovation is fundamentally about causing a switch from this old way to your new way.
And, the best way to cause this switch is to break the old way—not literally, but through positioning.
The best place to do this is in your product pitch.
Some of the best product pitches start by acknowledging their true competition, then go on to break these alternatives by demonstrating how they get the job done differently and a whole lot better.
Steve Jobs was a master at this.
When he introduced the iPhone in 2007, he set the context by identifying his true competition as smartphones.
He then went on to break existing smartphones for everybody with this product quadrant where he plotted smartness on one axis against ease of use.
- Regular cell phones were not so smart and not so easy to use.
- Smart phones were smarter but harder to use.
Why? Because half the phone is taken up by a plastic keyboard that is not easy to type on.
Then he posed the question: What if we could get rid of this keyboard and make it all screen?
This is when he shows a picture of the iPhone as a single piece of glass, and he has the audience where he wants them. The rest, as they say, is history.
That’s the power of the Innovator’s Gift at work. It’s not about solving new problems no one cares about but demonstrating how you solve your customer’s existing problems a whole lot better.
