How Start-ups Should Think About Competition

The short answer is:

1.  It is good.
2.  Bring it on.

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The long answer vis a vis web start-ups is:

Competition validates.  If you're building a start-up and have no competition, then one of three things is happening:

1.  You're a visionary Picasso-type.  This is possible, but amazingly unlikely.
2.  You're targeting a market that is so teeny tiny that no one else cares about it.
3.  You haven't yet Googled to look for competitors.

In other words - there are very few original ideas when it comes to Internet products and there are always competitors.  Ideas that are somewhat original and potentially lucrative end up with immediate copy-cats.  (The small army of Groupon and flash sale clones come time mind.)  Attractive markets that don't have competitors at the start eventually end up with lots.  (Dodgeball, Foursquare, and the location-based game/service craze are a great example.)

Soooooo.  Having competitors means that you're on to something.  This is a good thing!

Competition isn't a risk.  I wish I had a dollar for every time that someone has said "But what about Social Media Co?  Aren't they a competitor?" because it happens a lot - mostly because we're in a hot space.  (See above.)

We're early enough in the market such that I'm not worried about a single company (or a handful of companies) drinking all of the milkshake.  Our market is going to play out over the next few years and have a few big winners and a handful of good companies.  On the contrary - if I were building a new search engine, then of course competition would be a pretty big risk.

For companies like Argyle, the majority of the risk lies in execution.  Can we build a great team?  Can we augment our product with the right features?  Can we generate sales leads?  Can we convert them?  Can we do so at a large scale?  Can we do all of this at blinding speed?  Those are the risks that I'm worried about.  Not what the other guy is going to do next.

Competition sharpens iron.  True playaz don't let competition define them, they use it to get stronger.  

Great competitors drive great companies to work harder, sell faster, etc.  For start-ups especially, great competitors can create a singular, easy-to-understand "enemy" that can galvanize a team to achieve great results.  You gotta think that NetFlix had a "Kill Blockbuster" sign hanging in their office during the very early days.

Note that the Biblically-derived "competition sharpens iron" has a counterpoint based in 10th grade chemistry - "Competition melts sodium".  Sodium is an extremely soft metal and can be easily cut with a kitchen knife.  (BOOM!  Thanks, Mr. Legget.)  

In other words - if you don't have game, then you worry unnecessarily about your peers and you eventually lose focus as a result.