Competition is the Best that can happen to your SaaS Startup
๐ช๐ต๐ ๐ฐ๐ผ๐บ๐ฝ๐ฒ๐๐ถ๐๐ถ๐ผ๐ป ๐ถ๐ ๐๐ต๐ฒ ๐ฏ๐ฒ๐๐ ๐๐ต๐ถ๐ป๐ด ๐๐ต๐ฎ๐ ๐ฐ๐ฎ๐ป ๐ต๐ฎ๐ฝ๐ฝ๐ฒ๐ป ๐๐ผ ๐๐ผ๐๐ฟ ๐ฆ๐ฎ๐ฎ๐ฆ ๐๐๐ฎ๐ฟ๐๐๐ฝ ๐
If there is only one piece of advice I could give to startup founders, this would be it.
Itโs natural to feel uneasy about competition. But here is the truth: if you’re building a new product category on the market, your main “competitors” aren’t fellow startups – but the tools made in-house or basic things like spreadsheets and Google products.
Whereas ๐ฐ๐ผ๐บ๐ฝ๐ฎ๐ป๐ถ๐ฒ๐ ๐๐ถ๐๐ต ๐๐ถ๐บ๐ถ๐น๐ฎ๐ฟ ๐ผ๐ณ๐ณ๐ฒ๐ฟ๐ถ๐ป๐ด๐ ๐ฎ๐ฟ๐ฒ ๐๐ผ๐๐ฟ ๐ฝ๐ฎ๐ฟ๐๐ป๐ฒ๐ฟ๐ ๐ผ๐ป ๐๐ต๐ฒ ๐ท๐ผ๐๐ฟ๐ป๐ฒ๐ ๐๐ผ ๐ฝ๐ฟ๐ผ๐๐ฒ ๐ฌ๐ผ๐๐ฟ ๐ฐ๐ผ๐ป๐ฐ๐ฒ๐ฝ๐ ๐๐ผ ๐๐ต๐ฒ ๐บ๐ฎ๐ฟ๐ธ๐ฒ๐.
Think of it from a consumer behavior perspective: choosing between only two very different options – A (your startup) and B (in-house tools) can be tough. But if you throw in option โA-โ, which is similar to โAโ, it eases the choice.
Now, the โBโ option (in-house tools) disappears from your radars, and the focus shifts to comparing the two โAโ options, making the decision simpler. I havenโt invented it, this idea has been well described by Dan Ariely in his โPredictably Irrationalโ.
A real story from the history of marketing illustrating how it works. At the beginning of the 20th century, a company launched a brand new bread machine to the market (something that had never existed before). But why would anyone need it? Itโs something unfamiliar, and you can bake bread in a usual oven.
When the company didnโt manage to sell its invention, instead of removing the machine from shelves, it launched the second model – bigger, clumsier, and more expensive. This way, consumers could compare two close options and choose the best one. The question was not whether to buy a bread machine or not but ๐ธ๐ฉ๐ช๐ค๐ฉ ๐ฐ๐ฏ๐ฆ ๐ต๐ฐ ๐ฃ๐ถ๐บ.
A similar mechanism plays out with startups. ๐๐ผ๐บ๐ฝ๐ฒ๐๐ถ๐๐ถ๐ผ๐ป ๐๐ต๐ถ๐ณ๐๐ ๐๐ต๐ฒ ๐ณ๐ผ๐ฐ๐๐ ๐ณ๐ฟ๐ผ๐บ ๐ถ๐ป-๐ต๐ผ๐๐๐ฒ ๐๐ผ๐ผ๐น๐ ๐๐ผ ๐๐ผ๐๐ฟ ๐ฆ๐ฎ๐ฎ๐ฆ ๐ฝ๐น๐ฎ๐๐ณ๐ผ๐ฟ๐บ. Meanwhile, it also gives you the motivation to build an awesome product that is “A” and not โA-โ.
So, if your product is ๐๐๐ฎ๐ฏ๐น๐ฒ, ๐๐๐ฒ๐ฑ ๐ฏ๐ ๐ฑ๐ผ๐๐ฒ๐ป๐ ๐ผ๐ณ ๐ฟ๐ฒ๐ฎ๐น ๐ฝ๐ฎ๐๐ถ๐ป๐ด ๐ฐ๐น๐ถ๐ฒ๐ป๐๐, ๐ฎ๐ป๐ฑ ๐ฏ๐ฎ๐ฐ๐ธ๐ฒ๐ฑ ๐ฏ๐ ๐ด๐ฟ๐ฒ๐ฎ๐ ๐ฟ๐ฒ๐๐ถ๐ฒ๐๐ ๐ฎ๐ป๐ฑ ๐๐๐ฐ๐ฐ๐ฒ๐๐ ๐๐๐ผ๐ฟ๐ถ๐ฒ๐, ๐๐ผ๐โ๐ฟ๐ฒ ๐ป๐ผ๐ ๐ท๐๐๐ ๐ฐ๐ผ๐บ๐ฝ๐ฒ๐๐ถ๐ป๐ดโ๐๐ผ๐โ๐ฟ๐ฒ ๐๐ถ๐ป๐ป๐ถ๐ป๐ด ๐
A little Monday wisdom. Now, back to work! ๐ช
