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Comment by abba_fishhead | Hacker News Reader

I certainly cannot compete on features, and saying that I'll compete on "design"/"ease-of-use" is trivial; it's the execution that's hard. I could target only restaurants, and customize my entire software for it to serve it better, but there are already solutions out there doing it to appeal more to the restaurateurs.

In other words, I don't know what my competitive advantage will be should I decide to enter this market, yet I know this market pretty well based on my first-hand experiences.

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First, a quick anecdotal story. Recently, an entrepreneur came to me and said he had a solution for a particular market he had worked in for years, inventory management software. His daughter had recently started a small business and was using spreadsheets and paper to keep track of inventory. He started looking around and many other small businesses were doing the same. There were solutions that were out there, everything from spreadsheet templates, to iPhone apps, to access databases that could help these small business owners but they didn't use them. It was obvious that these solutions weren't easy to use, weren't what the small business owners wanted, and weren't working. So he built an amazing, simple, attractive solution using his decades of industry experience. I am not sarcastic when I say his solution was, honestly, pretty nice, and better than the rest of the market.

He came to me because it wasn't selling. In fact, he decided after some time to put it on a freemium model. Even the basic, absolutely free edition had almost no users. Why? Was it not working as intended? Did he have bugs? Was it slow?

Well, no. It was a great piece of software. The market didn't want it though. It turns out that spreadsheets and paper work well for small businesses looking to track a certain amount of inventory. If they get big enough to need more than they want something more than this guy was offering. There was literally no market for the software he built. He had no competitive advantage because the market didn't see a need for a solution. Some lower level employees of small businesses might have wanted his software, but the owners, the people paying the bills, didn't see the need and didn't care. Spreadsheets and paper just worked. End of story.

I'm not trying to discourage you from entrepreneurship at all. However, not all businesses work. You can attempt to compete on price, but that almost never works. As others have said, your competition will smash you on price. You can compete on features. But you have to ask yourself, why aren't businesses using the competition now? If it turns out that it is because they just don't want a technical solution, or because they don't believe they have a problem, then you are in a position where you have to win on educating a market, and that is a costly and formidable issue. Maybe instead you'd like to try to pull customers away from existing solutions, not onboard customers who aren't using a solution. Well, is the time and effort worth it to switch from an existing solution to your solution for $10 in monthly savings? I doubt it. Finally, remember that there are other costs to onboarding customers. If you have to spend an hour on the phone with each customer each week for a $20 monthly fee, just remember how much you are really making.

Sorry, I realize that doesn't help you to solve your problem or find your competitive advantage. Sometimes, there is no competitive advantage.

Amazing anecdote/post there.

To me, the biggest take-away is: confirm the market before you build. So instead of just coming up with a legitimately good idea and then going to work, set up the marketing material first to measure hits, or talk to people in industry and see if they would pay $x/month if such a thing existed.

This is even pre-minimum viable product level, this is putting feelers out to see if the MVP is worthwhile.

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