Ask HN: Found a smart competitor with a 3y headstart. What to do?
16 comments
It's good to know they exist, they'll probably be aware that you exist sooner or later as well.
It's a big world!
There is more than room enough for two, three or 50 companies doing what you're doing, the market is more than large enough for that, especially if you look overseas as well.
A three year headstart is your advantage. After all, you get the benefit of their three years of product development without having to go the long way round. Check out what they've got and learn from it.
Stick to your plan, observe them like a hawk and make sure that you give your customers excellent service. They won't go looking for a competitor until you mess up.
Don't worry so much about keyword rankings, a solid business does not solely depend on search engines for its traffic. And there is always advertising if you want to go and acquire new customers in a higher volume.
As for going 'niche' that might be a great strategy to stay under their radar until you've been able to level the playing field and you have a bigger war chest.
But in the long run their existence shouldn't matter much, it's not like you're going to go head to head with microsoft or google on operating systems or search.
It's just another company, they come and go. Likely there are other competitors out there that you haven't picked up on yet.
In a market with no competition, anybody can be 'top dog'. Such markets are illusions, any way that you find to make a living someone else will come and see you and think 'hey, nice idea'. Some of them will be better, some of them will be worse. There is no hard and fast rule that says that the first mover will be the one to win the game.
The there is the subject of locality. If you are going to address the 'self employed' market then there are so many options so 'slice' that market that if you make it easy to adapt your product to a niche that you could also address many of these niches in parallel, effectively you are still 'broad' but you now have a unique advantage for each of those little sub markets.
Which should remedy some of your keyword worries, since it is much easier to rank high for combinations of keywords than that it is to rank high for individual keywords.
good luck!
It's a big world!
There is more than room enough for two, three or 50 companies doing what you're doing, the market is more than large enough for that, especially if you look overseas as well.
A three year headstart is your advantage. After all, you get the benefit of their three years of product development without having to go the long way round. Check out what they've got and learn from it.
Stick to your plan, observe them like a hawk and make sure that you give your customers excellent service. They won't go looking for a competitor until you mess up.
Don't worry so much about keyword rankings, a solid business does not solely depend on search engines for its traffic. And there is always advertising if you want to go and acquire new customers in a higher volume.
As for going 'niche' that might be a great strategy to stay under their radar until you've been able to level the playing field and you have a bigger war chest.
But in the long run their existence shouldn't matter much, it's not like you're going to go head to head with microsoft or google on operating systems or search.
It's just another company, they come and go. Likely there are other competitors out there that you haven't picked up on yet.
In a market with no competition, anybody can be 'top dog'. Such markets are illusions, any way that you find to make a living someone else will come and see you and think 'hey, nice idea'. Some of them will be better, some of them will be worse. There is no hard and fast rule that says that the first mover will be the one to win the game.
The there is the subject of locality. If you are going to address the 'self employed' market then there are so many options so 'slice' that market that if you make it easy to adapt your product to a niche that you could also address many of these niches in parallel, effectively you are still 'broad' but you now have a unique advantage for each of those little sub markets.
Which should remedy some of your keyword worries, since it is much easier to rank high for combinations of keywords than that it is to rank high for individual keywords.
good luck!
great advice, thanks.
you're right: a 3y head start means they've made a lot of mistakes that we can learn from.
slicing the self-employed market in many different ways is exactly how i'm thinking about it, for the same reasons you mention: being broad and ranking highly for specific keyword combos.
thanks again!
you're right: a 3y head start means they've made a lot of mistakes that we can learn from.
slicing the self-employed market in many different ways is exactly how i'm thinking about it, for the same reasons you mention: being broad and ranking highly for specific keyword combos.
thanks again!
A quick&dirty math approach:
At a very basic level, you're working with:
potential_revenue = sum(total_market) * P(customer) * LTV_over_period
(LTV usually stands for lifetime value of customer, but we're only considering annual numbers below)
First you must must must figure out what the size of your total market is; I assume you already know this number from the top of your head (if not, you've got bigger problems to worry about).
At this point, this becomes a problem of function maximization. Assuming your competitor is the market leader, and the rule of thumb for market leaders to take 50% of the total market, what percentage of the remaining clientbase can you realistically capture? Calculate your potential revenue with this scenario. Do the numbers add up for anything sustainable? If no, pivot.
With nichification, your total market is obviously smaller, but you might capture it better. Calculate it with markets [A,B,C] ,and see what percentage of these market you have to capture, in order for total revenues to exceed that of non-nichificated product. Can you capture that amount realistically? If yes, nichify; otherwise, proceed with original plan.
At a very basic level, you're working with:
potential_revenue = sum(total_market) * P(customer) * LTV_over_period
(LTV usually stands for lifetime value of customer, but we're only considering annual numbers below)
First you must must must figure out what the size of your total market is; I assume you already know this number from the top of your head (if not, you've got bigger problems to worry about).
At this point, this becomes a problem of function maximization. Assuming your competitor is the market leader, and the rule of thumb for market leaders to take 50% of the total market, what percentage of the remaining clientbase can you realistically capture? Calculate your potential revenue with this scenario. Do the numbers add up for anything sustainable? If no, pivot.
With nichification, your total market is obviously smaller, but you might capture it better. Calculate it with markets [A,B,C] ,and see what percentage of these market you have to capture, in order for total revenues to exceed that of non-nichificated product. Can you capture that amount realistically? If yes, nichify; otherwise, proceed with original plan.
thanks - the numbers definitely add up for us.
hadn't heard the "market leaders have 50% market share" rule of thumb before. (curious: do you have a source for this, or is it from experience?)
hadn't heard the "market leaders have 50% market share" rule of thumb before. (curious: do you have a source for this, or is it from experience?)
You already have a couple of clients prepared to pay for your software. If the 'three years ahead' competitor is so great, why aren't they using the competitor's product rather than yours?
It sounds to me like your competitor is targeting a different market to you, and picking up some of your target market as a happy accident. If you focus on the needs of your market, it becomes less and less likely that those sort of people will use your competitor's product.
I suspect the competitor is unlikely to care too much about your product - they'll see it as a 'low end' solution that only has the potential to take away customers they don't make much from anyway.
It sounds to me like your competitor is targeting a different market to you, and picking up some of your target market as a happy accident. If you focus on the needs of your market, it becomes less and less likely that those sort of people will use your competitor's product.
I suspect the competitor is unlikely to care too much about your product - they'll see it as a 'low end' solution that only has the potential to take away customers they don't make much from anyway.
thanks. based on the research i've done of competitive offerings and talking to customers, it's nearly impossible to serve the needs of both markets (BigOrgs and self-employed) while keeping the software simple and enjoyable to use.
> I suspect the competitor is unlikely to care too much about your product - they'll see it as a 'low end' solution that only has the potential to take away customers they don't make much from anyway.
never thought about it this way, but probably true. thanks!
> I suspect the competitor is unlikely to care too much about your product - they'll see it as a 'low end' solution that only has the potential to take away customers they don't make much from anyway.
never thought about it this way, but probably true. thanks!
First, you have to decide if you want to compete with them head on. This means beyond just having a similar product. It means going after the same customers and same everything.
If you do go that route, you should make use of the upsides. One upside is, you can reduce your risk by emulating their proven product design/market strategy. Steve Blank has a post on how he was able to get sooo much out of his competitor's catalog/specs.
Simply put, if there is a company with a product and lots of customers and you want to compete with it, you don't have to reinvent the wheel if you can emulate individual components of the competitor.
Now that you are close to even with them on product/marketing, you can find an area where you will be better than them. Pricing is weak. May be you can offer an added service. May be you can make some component more efficient and highlight the fact that you are more efficient than that competitor.
Competition can be real good if you know how to use your (successful) competition as free R&D.
If you do go that route, you should make use of the upsides. One upside is, you can reduce your risk by emulating their proven product design/market strategy. Steve Blank has a post on how he was able to get sooo much out of his competitor's catalog/specs.
Simply put, if there is a company with a product and lots of customers and you want to compete with it, you don't have to reinvent the wheel if you can emulate individual components of the competitor.
Now that you are close to even with them on product/marketing, you can find an area where you will be better than them. Pricing is weak. May be you can offer an added service. May be you can make some component more efficient and highlight the fact that you are more efficient than that competitor.
Competition can be real good if you know how to use your (successful) competition as free R&D.
thanks. not planning to go head to head with them, but your perspective on pulling even on product/market adn then differentiating is a novel one to me. appreciate the comment.
If it took you a while to find the competition, it will also take your customers time. And by that time, they will be used to your software.
yeah, that's what i was thinking too. i've been talking to customers / wireframing for about a month and hadn't even heard of these guys, and neither had my initial customers.
Every piece of software in existence has competitors. If you can't beat your competitors (even by iterating), then listen to your existing customers, and find out what they want.
You might drift into a vertical niche, if your product is a good fit for that niche.
You might drift into a vertical niche, if your product is a good fit for that niche.
thanks. our plan is to always listen to our customers while keeping an eye on competitors. figure the company that wins is the one that's closer with their customers.
It actually depends a lot on the type of service that you are considering: will that competitor make your life easier or worst?
A simple example: my brother sells pearls. He considers other pearl sellers as competitors, but actually the more people see pearls being worn, then more they'll assume it is a legitimate jewel — so diamond sellers are his real competitors, and other non-stone gems should help legitimize his business. Therefore, when he can't accomodate a prospect (say, he doesn't have the right color) he should advertize for other pearl providers.
Another similar tech example: e-mail; the more companies used e-mails, the more IMAP became a useful protocol. The complete opposite would be ERPs: it's much easier to share the same ERP as your customer & provider. Therefore, if you are a competitor of SAP (the ERP for BigCorp) trying to specialize towards SMB, you spend a lot of commercial effort to explain the benefits of ERP in general to small businesses, only to pave the way for them switch to SAP——because that's what their customer use, and those are too big to change.
That why you have many e-mail providers, several cell phone makers, but only one dominant search-engine, one dominant ERP provider, one dominant social network, etc. To tell the difference is hard —— for instance, encouraging open standards might help your customer to switch to the leader more than it would help you offer a compatible service.
I'd love to help you (all that is what my PhD is about ;) but I'd need more detail about your specific industry.
A simple example: my brother sells pearls. He considers other pearl sellers as competitors, but actually the more people see pearls being worn, then more they'll assume it is a legitimate jewel — so diamond sellers are his real competitors, and other non-stone gems should help legitimize his business. Therefore, when he can't accomodate a prospect (say, he doesn't have the right color) he should advertize for other pearl providers.
Another similar tech example: e-mail; the more companies used e-mails, the more IMAP became a useful protocol. The complete opposite would be ERPs: it's much easier to share the same ERP as your customer & provider. Therefore, if you are a competitor of SAP (the ERP for BigCorp) trying to specialize towards SMB, you spend a lot of commercial effort to explain the benefits of ERP in general to small businesses, only to pave the way for them switch to SAP——because that's what their customer use, and those are too big to change.
That why you have many e-mail providers, several cell phone makers, but only one dominant search-engine, one dominant ERP provider, one dominant social network, etc. To tell the difference is hard —— for instance, encouraging open standards might help your customer to switch to the leader more than it would help you offer a compatible service.
I'd love to help you (all that is what my PhD is about ;) but I'd need more detail about your specific industry.
largely better, since they're spending VC dollars to educate the marketplace on why it's a good idea to have the product. i just need to find and compel the self-employed folks to buy from me instead of them.
thanks!
thanks!
1. Do some market research, actually having some competition will make market research much easier - phone their clients and simply ask them which new features they would like and what things do they have trouble with, then target clients with similar profiles.
2. You could build a migration tool so that you can approach their smaller clients, offer a cheaper package with the guarantee that you can migrate their existing data.
2. You could build a migration tool so that you can approach their smaller clients, offer a cheaper package with the guarantee that you can migrate their existing data.
thanks, i like both of these, especially the idea of a migration tool.
How many customers do you need to hit your mark? it is less than 10% of your competitor? Think about churn and picking up their scraps, as it were. You may be able to survive as a small fish, if you are trying to build a so-called lifestyle biz.
way less than 10%. thanks!
A lot of people are making good comments about there being room for more than one competitor in a marketplace. I totally agree with that but I would add that this is true if the service stands alone.
If your product depends on network effects, it is no longer true. Services like Facebook and twitter are more valuable when all of your friends are using it too. These tend to be winner-takes-all.
I suggest that you stick to your strategy until you hear a customer mention a competitor by name, or otherwise have proof that you are losing customers to your competitor.
If your product depends on network effects, it is no longer true. Services like Facebook and twitter are more valuable when all of your friends are using it too. These tend to be winner-takes-all.
I suggest that you stick to your strategy until you hear a customer mention a competitor by name, or otherwise have proof that you are losing customers to your competitor.
agreed re: network effects. this isn't one of those businesses though.
> I suggest that you stick to your strategy until you hear a customer mention a competitor by name, or otherwise have proof that you are losing customers to your competitor.
i like this - thanks!
> I suggest that you stick to your strategy until you hear a customer mention a competitor by name, or otherwise have proof that you are losing customers to your competitor.
i like this - thanks!
There have been a few similar posts on here in the past. The consensus is usually something along the lines of... keep building your product. Don't let your competitors scare you. Think of it like driving; if you drive down the highway staring at the car next to you, you're going to crash. Look forward.
Given that you already have a paying customer helping you develop it, and that your product is supposedly easier to use, this doesn't even seem like a difficult decision.
Given that you already have a paying customer helping you develop it, and that your product is supposedly easier to use, this doesn't even seem like a difficult decision.
yep, after sleeping on it i think i was more startled than scared... startled i hadn't even found these guys after looking for so long. which, i guess, it a good thing.
It probably means its a good idea. Nobody ever gets total market and at the beginning you both have essentially zero market share. So compete hard for the clients they don't get. Or rope in people who've never heard of them. Just b/c they have nice uniforms and helmets doesn't mean they've scored lots of touchdowns.
>Just b/c they have nice uniforms and helmets doesn't mean they've scored lots of touchdowns.
haha, i love this line. there's definitely lots of room to play in this market, which i like. thanks.
haha, i love this line. there's definitely lots of room to play in this market, which i like. thanks.
Find out what you hate about their service, and make sure it is improved in yours. 37Signals' book had something about this, its the chapter on "Have an Enemey, pick a fight" - http://gettingreal.37signals.com/ch02_Have_an_Enemy.php
thanks. complex, hard to use and ugly software is an easy enemy, which we're happy to pick a fight with :)
This will make essential reading:
http://businessofsoftware.org/ebook.aspx
Although it's primarily concerned about pricing, the process of pricing requires consideration of your product placement with regard to the competition. Enjoy!
http://businessofsoftware.org/ebook.aspx
Although it's primarily concerned about pricing, the process of pricing requires consideration of your product placement with regard to the competition. Enjoy!
got it already - appreciate it!
Unless you are actually losing business to them I wouldn't worry. You are taking a niche market approach and should be able to find ways to differentiate your offering. From your description you are targeting a different market,
thanks sean. had one of my clients walk through it while i watched, sat on my hands, and shut my mouth. it was heartening to see that she was pretty confused about how to solve her problem with their product. happy to see that even though they overlap on our target market, we can still build a better product.
What do you do? You man up and kick their asses.
...And then some.
I'm in a similar situation. It's me versus Chegg.
I'm in a similar situation. It's me versus Chegg.
And if anything that should be a great motivator. A few years ago Chegg was in your shoes against EFollett and the bookstores. :-). Good luck, you can do it!
Thanks!
I just started building an MVP for a piece of software with a co-founder. We have a couple of clients who will pay, including one who is actively involved in sharing insights on the problems she faces and why she would need this software. We're looking to have the beta into our customers' hands in about a month. It will have taken 6w to build on nights and weekends. I'm starting marketing efforts in earnest, and ranking highly for key keywords is doable.
The software is for self-employed people who do a certain type of work (let's call it A), but it can be used by self-employed ppl who do other types of work too (B-Z).
There is a market for this software for organizations that employ many of these individuals under a larger brand (let's call them BigOrgs). The problem is that this software is overly complicated for self-employed people like my initial customers. So, we're aiming for simple and focused on the self-employed market. Also, most of the offerings in this space are visually complex and don't leverage the things many of us take for granted (social media marketing, APIs, Ajax, widgetization, clean interface, etc. Not that these make for a good product, mind you, but when used in the right doses they can make for a much better experience than one built in the late 90s, which is when many competing products were built).
Me and my co-founder are not trying to build a multi-million dollar biz. A biz with $500k of sustainable annual revenue (it's a high margin biz) would put us in a great position to build more products without taking on outside capital.
Now, the issue:
Just found a competitor who knows what they're doing. They're funded (a small round) by the who's who of SV angels. They're aiming at the BigOrgs, but their software appeals to the self-employed folks I'm building for too.
They're ranked highly for valuable keywords and have been around for three years. Their marketing strategy basically emulates mine, and they've gotten press amongst the usual SV blog suspects, along with sites like the NY Times. Articles claim they have 10s of thousands of users.
Their site looks pretty but isn't as easy to use as ours.
My analysis:
I'm not worried about the funding - we're happily bootstrapping off of a long term, flexible consulting contract. It also means they are required to go big (growth uber alles) and land big clients, which excites me - we're not interested in the BigOrgs market. The self-employed one is the underserved one in my analysis.
Their high keyword rankings are worrisome, as are their press mentions and 3 years of learnings.
My question:
Do we continue on as planned, nichify (market our products for self-employed people who do A, B, and C even though D-Z can use it, and then grow after we have a stable base?), or pivot (there are a bunch of other lucrative products for the same market that we can build, but aren't related to the core product we're building right now).
Thanks for your help!