I want to start a company, but see another player in the space doing what I want to do. How do I determine the level of competition they'll be? I have an idea for a company, but after doing some market research found that there is already another website doing the same thing. Think about if I was starting Lyft and I found out that Uber had been in business for 2 years, but didn't have many customers in my region of the United States. How would I know if I'll end up doing well (like Lyft did), or if I'll end up being crushed by the competitor. And what do investors say if they know there is already another company doing the same thing?
Like some of the other responses on this thread, I do not think competition is a bad. Lets put it this way: Every good idea has already been thought of by someone somewhere. The difference between most people and an entrepreneur is taking the most difficult step, which is to move from idea to actually putting in to place. After that all it comes down to is execution and that is what you need to optimize for. Investors will care about what makes you think you can do this better than everyone else out there. What is it about you, your team, your demographic, your product, your strategy that is superior. It's about how you frame your Go to market. Since you're interested in moving forward with your company despite the competition I'm guessing you see some advantages to your approach and it's just making sure you illustrate those AND in some cases double-down on those.
The other piece of this is 'second mover' advantage. So using the Uber / Lyft example. Uber is the bigger player so they get the brunt of the regulatory focus, scandals, etc. Lyft has the benefit of seeing where Uber has run into trouble or made a mistake and ensure they avoid doing the same thing. You can actually use this to frame your pitch to investors. For instance one of Lyft's focus points has been building a strong government relations team. They can then go to investors and say we want to do car-sharing but from the perspective of partnering with the existing rather than 'breaking it down' which is the uber approach.
In terms of collecting competitive intelligence:
1. do your due diligence. look at every piece of content you can find on them. Use their products if they have any
2. see if you can connect with someone there to learn more - be transparent, the fear of someone stealing your idea is overblown
3. Talk to people who used to work there. You don't need to ask for proprietary info but even just understanding their experience will tell you a lot about the company. For instance talking to uber employees who left 2 years ago would probably be good writing on the wall for where they are today.
4. Industry experts. They'll know what's working in the space and what needs more attention.
Hope this helps. Let me know if you need further clarity or want to chat. Happy to walk through in depth.
Answered 7 years ago
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