Who are your startup’s competitors (for real)?
When asked about their competitors, many founders rattle off a list of companies with similar tech products. But who are your "real" competitors?
When I was building Fruitful Fertility, one of the most common questions I was asked by prospective investors was, “Who are your competitors?” I’d quickly rattle off a list of other fertility-focused apps (“Peanut! Glow! Clue!”)
I soon learned that while those were my competitors on paper, there were also so many other competitors I hadn’t considered: private Facebook groups, professional therapists, even journals.
The problem that Fruitful was trying to solve was emotionally supporting people going through infertility, miscarriage, and IVF which was not at all limited to tech-enabled communities like I was trying to build. All of a sudden I saw my competitor set expand and my heart sank. Can we compete against sprawling social media platforms, mental health providers, and stationery stores?!
This is a common underestimation for founders. When asked who their competitors are, many first-time entrepreneurs tend to rattle off a few direct competitors in their space. But they don’t always consider what a true competitor is in the startup world - because they’re not always who you think they are.
Your true competitors aren’t always similar apps or brands working in your vertical. They’re oftentimes not digital or tech-enabled at all.
Here are seven questions founders can ask themselves to make sure they have an accurate understanding of their competitors and what they are building, what their shortcomings are, and what/if any white space is up for grabs.
7 Questions to ask yourself to better understand your competitors
1) What is the primary problem that my product is trying to solve?
Pick one problem. Be specific and clear. Write it down and stick it on a wall in front of your eyeballs. This will keep you on-track when you start thinking up fancy features and other ideas. Ask yourself, “Do these features and ideas align with my mission to solve this specific problem in the best, most user-friendly way it can be solved?” If not, toss it in the trash. If yes, onward friend!
2) Who is my product REALLY for?
You’ve probably already researched who your target user is…how old they are, what they care about, how much money they make, and how tech-savvy (or not) they are. So make sure you’re building a product and a brand that truly resonates with this particular person. Does it sound like them? Do they connect with it? Do they “get” it? Or do they prefer other brands that solve their problem - and if so, why?
3) Are there companies who have already built what I want to build?
Be honest with yourself. Is your company or idea really THAT different from others that are already making revenue and employing lots of people? It’s ok if the answer is yes, just make sure you know how you are different from them. And make sure they’re on your radar.
There are few things more painful as a founder than giving someone your pitch only to have them say, “Oh this sounds like what SUCH AND SUCH has built” then Googling them and learning on Crunchbase that they’ve already raised $10 million. Cool…
4) Are there any similar products, but being used in a very different industry or category?
While companies building tech or products but in separate verticals might not necessarily be “competitors," it's good to know what already exists and how it works.
If they’re a larger company, it can also help you better articulate your own pitch (I’d frequently tell people that Fruitful was like “Tinder meets Alcoholics Anonymous for infertility,” which seemed to land pretty well and got folks nodding along.)
5) Is this company a competitor or a future partner, vendor, or customer?
Sometimes it’s clear who your competitors are immediately. But sometimes a company that looks like a competitor at first glance could also be a future partner, vendor, or customer.
What are they really good at? What are you really good at? Is there a mutually beneficial relationship that could be explored via some kind of collaboration or partnership? It could be a small effort (e.g. a content swap or giveaway) or it could be a big effort (e.g. a merger or acquisiton) later. Keep your eyes and options open to all the ways things might shake out in the future.
6) Are there any mega brands looking to invest in the space I’m focused on?
Make sure you have a pulse on any big investments being made in your industry - especially by seemingly “random” corporations. Is Meta interested in investing in the specific technology you’re looking to use? It’s not a dealbreaker if they are, but it’s good to know who is actually working on a similar problem as you are - and how much capital and access to resources and audiences they already have.
7) How will my company be different in what we offer, how we talk about ourselves, our audience or our problem?
The cool thing about a free market is that there is always room for new competitors with better ideas. No brand can simply rest on its laurels without a fancy new product or brand coming in and slowly chipping away at market share.
The key thing to focus on (besides the problem itself and your audience) is HOW you plan to do things differently.
Is it a different offering altogether? Or is it the WAY you are talking about how you do things or what you offer? Make sure you are building something at least a little bit different from what already exists and be prepared to answer that question frequently and succinctly. There’s plenty of room for lots of different brands, apps, and ideas, just know how you are different and what makes you special and uniquely positioned to solve the problem you’ve committed to.
In conclusion, you need to know who and what already exists, how they’re working, and how things could be improved. Remember, your competitors aren’t always who you think they are so keep your eyes open and ears to the ground. Things can change in an instant (oftentimes in your favor!)
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Elyse Ash is a marketer, creative, writer, speaker, founder and loud laugher. In her free time she enjoys playing with her kiddos, going to new restaurants, reading and pretending she’s into yoga.