
Why Entrepreneurs Are Bad At Finding Their Competition - bsirkia
http://www.berserkia.com/blog/doing-a-competitive-analysis
======
EGreg
Because sometimes investors run the following algorithm:

Q) Do you have many successful competitors?

A1) No -- then why isn't anyone succeeding in this space? Maybe it is too
ahead of its time but most likely there's a reason no one can make it work. In
any case, I'm out.

A2) Yes -- in this case look at how much competition you have, it's too hard
to break in now. It's a very crowded space and you won't be able to
differentiate yourself. I'm out!

Proceeds to invest a couple months later based on liking the team and seeing
who else is investing...

~~~
gedrap
You answered your own concern here.

>> based on liking the team

We all know that the idea without an execution is not worth much. It's easier
to halt everything by saying the idea sucks rather than saying that he doesn't
believe in the founder.

>>seeing who else is investing

Social proof is a huge factor and touches many aspects of every day life. And
at the end of the day, investors are humans.

~~~
6cxs2hd6
It's wiser to adopt the view that it's not really about "entrepreneurs",
"business models", and "venture capitalists". If it ever were that, it sure
ain't anymore.

Instead the dynamic is closer to student-apprentice applicants and admission
committees.[1]

[1]: "Entrepreneurs Are The New Labor" by Venkatesh Rao:
[http://www.forbes.com/sites/venkateshrao/2012/09/03/entrepre...](http://www.forbes.com/sites/venkateshrao/2012/09/03/entrepreneurs-
are-the-new-labor-part-i/)

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gkoberger
I agree in general (so many people, myself included, avoid finding competitors
because it's like asking for bad news.)

That being said, it shouldn't take 20-30 hours. If you're _looking_ for it but
can't find it, there's something missing with the existing companies
(execution, marketing, etc).

But make sure you know everything. Literally nothing kills a pitch or talk
quite like not being able to answer the question "So it's like ____?", even if
the mentioned startup turns out to be only tangentially related.

~~~
mirajshah
One of the points raised in the article is to understand _why_ you can't
immediately find a good competitor. 20-30 hours of search helps you cover your
bases by finding the languishing or dead competitors; IMO learning what they
have done to die out helps you avoid those pitfalls in the future. This could
be part of your point about "knowing everything". Being prepared is paramount.

~~~
Egregore
I think that sometimes you have to find out what are specific terms used in
that field, it might not be initially obvious for a new comer in a field.

~~~
bsirkia
Definitely, it's not always easy knowing what to search for and it can take
awhile to narrow that down.

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nathancahill
> "All ideas are second-hand, consciously and unconsciously drawn from a
> million outside sources, and daily used by the garnerer with a pride and
> satisfaction born of the superstition that he originated them." -Mark Twain

Of course someone already built your idea. You'll find 30 versions of it just
be searching for suitable domain names. Take advantage of that. Your first 30
iterations and pivots are done before you even started!

If you go beyond the Yes/No of instantdomainsearch.com and actually look at
what's hosted on the unavailable domain names. Click around the website.
Become a customer. This is more useful "market research" than blasting out
hundreds of SurveyMonkey surveys or asking people if they'd use your product!

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vorg
> One of the most exciting times of being an entrepreneur is the very early
> days after having the idea. You discovered a pain point, created an awesome
> solution, and now you have a whole world of potential ahead of you.

Having an idea and building a solution is innovation, not entrepreneurship.
"Entrepreneurs" are business people who take what someone else built and
compete with other business people to sell it to the greatest market at the
highest margins, then flog the business itself to some sucker just before it
tanks. Someone who imagines and builds needs to be quite profound, whereas
someone who takes and sells needs to be quite petty, so rarely do you find
innovation and "entrepreneurship" in the same individual.

So I would say _innovators_ are bad at finding their competition, which is the
"entrepreneurs". Innovators often get a shock at how vicious "entrepreneurs"
turn out to be when the product's almost ready. Even before there's a solution
built, many "entrepreneurs" roam around looking for innovator victims who
happily advertise what they're doing or even posting their software samples
online. "Business is war" to the entrepreneur. Anyone in business who's
building and trusting instead of stealing and fighting won't last long.

~~~
wellboy
Hm, disagree. Innovation is an essential element of entrepreneurship, just as
persistence, boldness, business-acumen, if not the most essential one.

If you're not an innovator you also can't really be an "entrepreneur" since
you won't be able to build new features for your product, nor scale your
company.

What you're describing is more of an executive/corporate CEO that was hired
into the company after a few years down the track I would say.

An example that comes to mind is Eric Schmidt. He's not an entrepreneur at
all, he never invented something or created something new. However, he is a
full-on CEO. He probably can scale up your company from $10,000 rev to $100M
rev like no one else.

Imho entrepreneurs normally aren't good CEOs. They like to create new things,
work on the product and usually don't want to bother talking with investors,
hiring people or talking to the media.

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dangrossman
> I would google "Rideshare OR Carpool + Service OR Startup OR App"

How many of those search modifiers still work with Google, and does it give
the parsing he expects? I haven't seen anyone do a search like that in a
decade. I notice that removing the plus gives the exact same SERPs for
example.

~~~
bsirkia
I still do it, though you might be right that it's deprecated and just doing
"rideshare carpool service startup app" would be the exact same.

EDIT: Just tried it, and it does return different results. The search modifier
OR seems to work, but the + might not be doing much. I definitely find the
search with the modifiers to return more relevant results.

~~~
charleslmunger
Putting a single word in quotes is the same as using a plus used to be.

+searchterm has been replaced by "searchterm"

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blazespin
In general, you should do a competitive analysis before even thinking about
problems or solutions. If you want to be an entrepreneur, pick an area that
interests you and dig very deep in all the players and what they provide. Then
learn about the problems (usually by using their solutions) and look for pain
points that are missed and that you are well suited to solve.

At that point your brain will veer away from solutions that are already well
covered and will naturally focus on the fuzzy areas that are being missed. But
you know at least that you are dealing in an area that a) you enjoy (this is
the most important) and b) your market is validated.

The key point you have to look out for at this phase, is your solution just a
feature of some bigger product? In which case, you'll want channel partners /
look for acquisition exits. Which, TBH, nowadays is often the easiest and
fastest way to exit.

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dsugarman
Depending on the market, 20-30 hours seems really low for thorough market
research. Often times, when a market is super crowded, that means that there
is a great opportunity because there really isn't a winner. Doing thorough
research on tens or hundreds of companies, especially in opaque markets can be
a big waste of time compared to focusing on what you are doing that is
working.

Referencing AngelList and CrunchBase leads me to believe that this article is
applying only to startups that compete with other startups but it is ignoring
the bigger opportunity of changing existing markets.

~~~
bsirkia
I agree, the amount of time you spend can really vary. If you're going after a
space with major incumbents, it should be much longer, because you really need
to drill into the strengths, weaknesses, and opportunities of your
competitors.

I reference CrunchBase and AngelList not because it's only startup-startup
competition, but it's a great place to look for new entrants that you often
won't find through Google alone. If there are major incumbents in your space,
you should find them with that initial google search.

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arkitaip
I found this particularly insightful: "Startups are all about learning and
iterating and failing fast, so competitors are a bunch of experiments that
have already been done."

I'm trying hard to learn to getting to know the competition and appreciate it
but it can be very discouraging to find out that your killer app is just
another player in a saturated market. Nevertheless, I feel that I'm more
honest with myself if I do a competitive analysis very early on; even one that
takes a few minutes is incredibly useful.

~~~
bsirkia
I definitely know what you mean, it can be incredibly discouraging. But,
hopefully you can copy what they have done well and improve what they haven't.

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spo81rty
Just because a competitor does a certain feature or something a certain way
doesn't mean they iterated quickly, perfected it and you should copy. It could
also be that they simply have enough customers they are scared to change
anything for even the better and are stuck. At my last company we got to a
point where the executives were happy making zero product changes to make life
easier on our support team and not make customers mad due to re-training and
causing new bugs.

Some others may be nimble enough to add whatever your killer feature is. But
their management team or investors may want to keep with what works and not
vary from that path.

Point is some companies are in different points of their life cycle. I think
it is good to know who the players are but to use your own product vision to
guide you. If you have no product vision and your goal is to just copy, well
good luck with that. Why a product is built a certain way isn't something you
can always figure out.

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qhoc
I agree on 20-30 hours estimate but in general, you just cannot sit down in a
few days straight and find out all competitors. The reason is very simple:
most of the time, you don't know the right keyword to search. This happened to
me. I spent days searching for competitors. Then I thought I had a pretty good
idea and started on coding. During that time, my head started to pop out with
"alternative" keywords, not necessarily direct competitor keywords. Those are
dangerous because again, most of the time, people already have a way to do
certain things (i.e. alternative solution). So that 20-30 hours is just the
tip of the iceberg. After you start reading blogs and talking to people, what
you ended up having is a way better list of keywords to search for. By the
way, don't forget to get ideas from Google Keyword Tool itself.

------
gavanwoolery
Every time someone approaches me about starting a company with a "brilliant"
idea, I run a quick Google search and ask them, well have you heard of ___ or
___? 99 percent of the time they give up after that.

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lylemckeany
>An investor or friend shouldn't be the first one to tell an entrepreneur
about someone new in their space.

This line resonated with me. I know the stomach-dropping feeling of someone
mentioning a potential competitor that I've never heard of. I usually play it
off and say, "Thanks, I'll definitely check it out" and then immediately
Google it on my iPhone as soon as possible. Luckily, in my research I haven't
found anything all that similar to what I'm working on.

This brings up a corollary question: Assuming I have a pretty well-informed
view of the competitive landscape and I can't seem to find anything that
solves the problem in a similar fashion, how do I sufficiently answer the
inevitable question from investors about my competition? I've often heard
people write and say that business ideas ALWAYS have competition, the tricky
thing is that the competition isn't always immediately obvious. Answering that
a startup doesn't have direct competition leads to skepticism, therefore
creating distrust right off the bat when it may not be warranted.

~~~
bsirkia
That's a great question. I think the only thing you can do is address who your
competition is, even if they're only tangentially related. I usually follow a
pattern of "X competitor is doing Y, which helps our target customer solve A
and B need but not C and D".

I think it's worth finding the closest competitor no matter how far away they
are, even just to signal that you've done the research.

~~~
lylemckeany
I think it's better to mention the tangential ones than to omit them because
it shows that you've really thought through the competitive landscape.

Competition is also not a bad thing. If there are a few startups vying for
attention in a certain space, it means there's obviously value there. You have
to prove to investors and customers that you're going to do it better and
ultimately win the lion share of the space.

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d0m
As a quick tip for new entrepreneurs is simply to hire someone to do it on
elance. For as low as 150-500$ you can get a very good summary of the market,
the competitors, the market-size. You can ask to have it in a excel
spreadsheet sorted by features, money raised, etc.

~~~
bsirkia
Definitely a good idea. I'm thinking about writing a post at some point about
how valuable outsourcing certain facets of the process can be, provided you
have some cash.

~~~
d0m
You should! I've learned to use elance (and when _not_ to use it too!), very
very useful. Especially when starting out without employees. You can't do
everything yourself, and it's stupid to try to do it.. but that's exactly what
most people do when they start (and what I did). Market research is a very
good example of a boring task that's very hard to do for entrepreneurs because
it can totally destroy their problem/idea..

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jamiequint
You should know who your competitors are, but focusing on them is a waste of
time.

"The last thing you want is to find out that hundreds of other people have
already thought of it and Andreesen just backed three of them."

This is a pretty naive point of view. Who cares if they are all startups.

Spend the time and energy this post recommends spending on your competitors
and direct it towards your own customers instead.

Also see #4 here:
[http://paulgraham.com/startuplessons.html](http://paulgraham.com/startuplessons.html)

~~~
arkitaip
This is an interesting POV. There's this school of thought in
business/marketing that continuous positioning is absolutely crucial for the
success of any business because it allows you to offer better value to your
customers. Not sure if I completely agree but most companies have to react
when the competition changes a major part of their business model or does
minor biz dev like dumping their prices.

~~~
jamiequint
Possibly for startups that are past product/market fit (not many seed stage
investments). Pre-product/market fit focusing on competition is a waste of
time.

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7Figures2Commas
I don't think "entrepreneurs are bad at finding their competition" as the OP
suggests.

In my experience, "We don't have any competition" usually translates to "We
are so differentiated from the competition that it effectively isn't
competition." That's more often than not an unrealistic conclusion, but the
reasons an entrepreneur might favor such a conclusion are fairly obvious.

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gruseom
Isn't this a just-so story? I don't see any reason to believe that more good
companies do things this way than don't.

