After a couple of customer interviews, a few competitors have likely come up in the conversations. Competitors might be big players like Google or Facebook that are regularly launching new offerings or might be something simple like a notebook and pen. In the future, doing a competitive analysis will help in fundraising or demonstrating why you will be successful. For now, looking into your competition will help you understand your product differentiation. You'll also learn more about your customers and gauge whether there is room in the market for your idea. Moreover, you may uncover if there is a reason that the problem has not yet been solved.
There are direct and indirect competitors. Direct means that the products are mostly the same and solve the same pain point (e.g., Uber and Lyft), and indirect competitor means the product is not the same but could potentially solve the same pain point. Also, as the companies grow, they could become direct (e.g., Uber and Lux Scooters).
<aside> 🙌 Tip on Competition: People always underestimate the status quo. If customers are using something right now that is free or VERY cheap, they are still unlikely to pay for a new solution that is only slightly better - even if it's not tech-enabled or requires more work.
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<aside> 🙌 Tip on Competition: Try them out! Sign up for their newsletters. Try their product/service (If you’re uncomfortable, ask a friend to try it). Note what the experience is like and what you like/don’t like about it. Don’t obsess over them, but stay informed. Note: We get asked if this is “shady,” and it is not as long as you are not copying IP.
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Did you find a lot of competitors? If so, are their solutions sufficient? Is there a niche (small but specific) customer that is not satisfied with that solution that you think you could target? If you find many solutions to satisfy your customers, you might need to pivot to customers or problem sets. It's ok to have competition; in some ways, it can significantly validate your product. If you want to build a sustainable business, you don't have to worry about beating out all your competitors. You have to be better for the customer you wish to serve. If you want to build a venture-scalable business and you find a high degree of competition, make sure you have the conviction and skill set (or team) to create a company that could get customers to switch products. Make sure you also start to understand the fundraising landscape because it might be more challenging to fundraise. The truth is, most attractive markets are going to be competitive, so gut check yourself on if you can build something much better than what exists and keep learning from others' mistakes and best practices!
One of the biggest challenges as a founder is hearing news about your competitors - maybe they've raised more money, they've solidified a strategic partner, they're launching something in your wheelhouse. Even bad news about your competitors can feel like bad news for you and make you wonder if you'll end up like them. That's why it's essential to understand where you differentiate yourself. If your competitor announces they're launching a new product that's exactly the same as you, it's time to deeply consider why you'll win. There are lots of reasons why this might be the case; maybe you'll have superior technology, or you might be targeting a different user base than they are. It could also be helpful to put some blinders on. Your focus should be on your customers and helping them, less on what your competitors are doing. Resist the temptation to imitate them unless what your customers are telling you is leading to the same thing.