A start-up’s #1 competition…The Back Button
May 17, 2011 § Leave a comment
Whenever you are pitching an investor, it is a good sign when they want to dive into the potential competition for your new company. It means that they buy into your product, market and team and are looking for reasons why this story won’t play out.** However, while it is a good sign, and a reasonable question, I do think that some investors can over-emphasize this point for a start-up.
A friend and adviser, Yanda, summarizes it well, “a start-up’s main competition is the back button.” Meaning, you need to capture the customer quickly and provide value right away. If you don’t capture a customer’s attention within the first 5-10 seconds on his first visit to your web page, then he will hit the back button and go back to browsing last night’s box scores or celebrity wardrobe malfunctions. It is only once you get them to sign up for your product and begin using it, that you need to figure out how to differentiate from potential competitors who enter the space. Don’t get me wrong, you should have some vision on how you will differentiate and build a barrier to entry in your product or GTM design. I am not saying focusing on competition is an irrelevant question. Rather, my point is, that a grand long-term differentiation strategy doesn’t much matter if you can’t acquire users with version 1.0.
I also like Yanda’s point because it is the right framing for a start-up. A focus on the back button is an implicit focus on competition, because it is a focus on product differentiation. But it is a focus on the competition through the lens of the customer, which I think is the right lens to view the challenge.
One last point on competition and your BTE, since most start-ups change dramatically from pre-launch to scaled version, the answer to the competition question will also change dramatically. In some cases, making the initial answer moot. Start-ups are mostly a bet on entrepreneurial teams. You have to believe that the team will out-innovate a big company that enters the space late.
In summary, if you have a time block allocated to thinking about competition for your start-up, my advice is focus on the back button for 95% of that time block. That is certainly your fiercest competition.
** By the way, if they don’t believe in your product, market or team, they probably will NOT spend any time talking to you about your potential competition, and that is decidedly a bad sign.