Short answer – there’s nothing much you can do, but a lot you need to think about – positioning, differentiation, pricing, advisors, funding, etc.
There are many times when you find a new idea and after a lot of customer validation framework for your ideas,you decide, “this is the idea to go with” and you decide to plunge and build.
Then a month (or a few weeks, or days) before your launch, a competitor launches. With the exact same features you expected to launch with, with the same problem statement, going after the same customers.
I put together a framework that I used with BuzzGain. A month before launch, Radian6 launched and a week after was the launch of Techrigy, and a few weeks later, Scout Labs launched as well.
While we were all launching “different products” at different price points, the market was the same was what investors told me. Well, they were wrong. Turns out we all got exits – Radian 6 raised the most money and was sold to Salesforce for > $200 Million, Techrigy and Scoutlabs sold as well, and I did exit as well.
Here are the 5 questions I asked myself when I saw the Radian 6 launch:
1. Was I still passionate about the idea? That was the first question I should have asked, but unfortunately it was not. So, in retrospect I am suggesting you do this instead. Think about if you still are curious – intellectually and enjoy learning about the market for a long time – 5-7 years at the minimum.
The answer to this question wont come to you in an hour, a day or a week, it might come to you after multiple discussions over a month or so.
If the answer is no, I’d recommend you go do something else.
2. Was the problem the customers I had been talking to real and a huge pain? I had shortlisted about 35 beta customers after talking to over 1000 potential targets over 6 months. What I realized later was that MOST of them knew about my competitors and were still willing to try my product because a) they knew me b) they thought I was solving a different problem for them than my competitors c) I had taken time to build a relationship with them.
If the answer to the question is that you have not done customer development yet, then I’d suggest you go and do that first, or do something else if you dont like the market.
3. Was the “market” large? Large is relative. Investors (who were largely clueless), thought this was going to be a small market for 1-3 “marketing automation” products and that HubSpot and others were going to come into the listening platform business. Turns out 10 years later, they still have not.
If you believe the market is large, it is not sufficient to internalize it. If you want to build a large company, you have to build a convincing case to help your investors understand that.
If the answer is the market is relatively small, you can still build a good business, but it wont attract investors given that one competitor was already in the market. The surprising thing is that sometimes (thanks to the herd mentality) many investors now will be interested if one company was funded in the space and they need to “check the box”.
4. Would I be able to differentiate my offering? If you were going to build a similar product aimed at the same market, then I’d advice you to rethink. If not, then spend time honing in on your differentiation.
BuzzGain was aimed at SMB, Radian6 started with agencies and others were focused on mid-market companies.
We focused on building tools that a marketing consultant could use for their clients, as opposed to agencies use for their larger clients.
In fact, you can see from my day-in-the-life analysis that we started out aiming a the same market – mid-sized agencies, but we changed based on Radian6’s launch.
Bonus: 5. Why was I wasting my time thinking about the competition?
Rule #1 – Dont care what they do. Rule #2 – There are no other rules. Rule #3 – What? Are you still looking for more rules? Go back and read Rule #1.
You will still have to do a comprehensive competitive landscape analysis (and then a competitor analysis, which is different), which I will cover the next 2 days.