Ask HN: How to enter a highly competitive market? | Hacker News Reader

Ask HN: How to enter a highly competitive market?

5 pointsvishalzone20026 comments

Hi HNRs, I have an idea on which I have recently started to work on. But I did a little google search on the idea and learned that there its a very competitive space. Although my idea differs a little bit but combined features of all the products in market is pretty comprehensive.

The market I am aiming is the survey/market research area.

My question is should I still give it a try or is it mostly worthless to even try penetrating a highly competitive market? Please share whatever you know.

thanks

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The right thing for me to tell you is that you should give up.

Why is this the right thing? Because a bunch of people are going to tell you that you are crazy over the next few years if you decide to try it. So you may as well hear it now from me and decide that you are going to do it anyway. Or just take my advice and give up now.

I'm currently tackling a multi-billion dollar market. It's pretty scary. I have my doubts every other week. But I think it's on the right side of crazy. We've identified several niches within the market that we think we have a good shot of being able to penetrate. These are $100+ million markets of varying competitiveness that are related to the competitive market. Once we've got a foothold there, we're going to try to start penetrating a few different segments of the competitive market. And then execute like crazy.

So we're not banking on our ability to penetrate the highly competitive market. Our competition has more money, people and better brand recognition.

But you can't step up to the plate and be afraid of the ball. You've got to try to hit a nice solid home run over the fence. You aren't going to build a google, groupon, airbnb or dropbox without competition.

I'm in it for the long haul. I've got a ton of room to pivot because it is a vast market. I've got a few different aspects that might become successful. I like my chances.

Startup school had a presentation last year i think that discussed startups in a land grab situation vs startups with entrenched players. I would start there. Build. And look for the right team.

I hope the idea is good enough to justify the next five years of your life working on it. Because that is what you are looking at doing.

Tell me about it. We're playing in a pretty congested space as well, depending on exactly how we define ourselves and our offerings. But we are, for now, looking at pursuing a niche strategy to try and get a beachhead, so we'll see how it goes. We do think the products we're building have a certain measure of uniqueness, but where we're really looking to differentiate ourselves is by having a better, more comprehensive overall vision for enterprise IT and by having a very diverse, but well integrated, suite of products.

There are a lot of niche players in a lot of different subfields. BPM, BI, "Big Data", Enterprise Social Networks, EAI, etc. We intend to be as close as possible to a "one stop shop" with solutions that tie all of this stuff together into a cohesive whole.

But depending on what decisions we make, and how exactly we position ourselves, we could be competing against some or all of:

Microsoft

Jive Software

IBM

Oracle

Cisco

Red Hat

Novell

Pentaho

SAS

Hortonworks

Cloudera

Google

Revolution Analytics

Alfresco

Clearvale

...

So, not a small challenge.

I'm in it for the long haul. I've got a ton of room to pivot because it is a vast market. I've got a few different aspects that might become successful. I like my chances.

Same here. And this is one reason we're sticking with the bootstrapped / self-funded approach for now. As long as the burn rate stays low (and it's essentially zero at the moment) we have an infinite runway to learn, experiment, pivot and find our niche... as long as the founders have dayjobs and stay motivated.

I know I quote quoting this essay, but one of the most powerful things I have read is pg's "How Not To Die" essay. That really speaks to me:

http://www.paulgraham.com/die.html

Good luck!

If you swap my big players and niche for your big players and niche, I could have written your reply here.

Specifically:

1. We've been called a one stop shop by multiple people. 2. We're self-funded by my day job with a trivial burn rate. 3. I've probably read "How Not to Die" > 100 times.

Before my current project, I tried to create small niche websites that would eek out enough to get me out of my day job. They never did. Some success, but not enough. So I decided to go big or go home. I like this approach way better.

I think grabbing a beachhead is crucial in a competitive space. I'm in year two. I pursued 5 or 6 different niches my first year, following the philosophy that you should release a minimum version one. And if you are going to be a one stop shop, the minimum has to thinly cover several niches/sub-niches. I was definitely embarrassed by some aspects, but people sent me unsolicited emails with feedback and appreciation.

I laughed a bit at the fact that I was trying to outdo the big players as a solo shop, when everyone else is trying to carefully test their lean startup principles. I convinced someone to join me because of the initial traction. And now we're beefing up 2 of the initial niches. Under the theory that we'll hopefully get traction in one of them by the end of the year. And patching holes in the rest will be sufficient until we have time to work on them more. Or find another team member.

If we can get traction in a 2nd sub-niche, we're going to be working on monetization in the highly competitive space (as well as the sub-niches we've got traction) in year three (next year). As it turns out, even when things have gone right, making money in a competitive space is still tough! We were able to grab traction in the first sub-niche because there isn't a clear path to revenue in it. We've got some ideas though; we just don't have enough people to go after both user growth and revenue growth. So we're going after user growth right now, given our infinite runway to learn ... limited only by our ability to stay motivated.

That's awesome. One good thing about what we're doing is that the monetization aspect is fairly straightforward. It's Open Source enterprise software, which we expect to sell under a subscription model very similar to what Red Hat does. I think RH and a few others have shown that this works, and the more I think about it, the more I realize that it's very compelling for the customer:

1. No huge upfront capital outlay

2. Paying part of the cost in (inflated) future dollars, which are less valuable than today's dollars

3. No big lump-sum version upgrade fee, ever.

We're still pre-revenue, but we are getting real close to making a serious effort to start signing up customers. In fact, I was trawling through Hoovers and Jigsaw earlier tonight, prospecting for leads in what we are targeting as our first attempted beach-head market. Over the summer we're going to be going after these guys hard and hopefully close a couple of deals.

Is it possible? Yes. Is it easy? No. How do you do it? If I had a magic formula for that, I'd be rich. But...

There is a large body of work "out there" on competitive strategy, differentiation, positioning, market segmentation, etc. I hate to say "go off and read this list of 15 books" but I don't think I can do justice to this topic in a HN comment. So, I will, indeed, just give you a list of books to consider.

Crossing the Chasm - Geoffrey Moore

The Four Steps To The Epiphany - Steve Blank

Positioning: The Battle for Your Mind - Al Ries, Jack Trout and Philip Kotler

The 22 Immutable Laws of Marketing - Al Ries, Jack Trout

The 22 Immutable Laws of Branding - Al Ries, Laura Ries

REPOSITIONING: Marketing in an Era of Competition, Change and Crisis - Jack Trout, Steve Rivkin

Differentiate or Die: Survival in Our Era of Killer Competition - Jack Trout, Steve Rivkin

Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant - W. Chan Kim, Renee Mauborgne

Understanding Michael Porter - Joan Magretta

Good Strategy Bad Strategy: The Difference and Why It Matters - Richard Rumelt

Hide a Dagger Behind a Smile: Use the 36 Ancient Chinese Strategies to Seize the Competitive Edge - Kaihan Krippendorf

Outthink the Competition - Kaihan Krippendorf

Competitive Strategy - Michael Porter

Competitive Advantage - Michael Porter

On Competition - Michael Porter

Future of Competition: Co-Creating Unique Value With Customers - C. K. Prahalad, Venkat Ramaswamy

Yeah, it's a lot of stuff. I won't say you need to read all of that, but everyone of those books is something that's influenced my thinking, and that I've learned a lot from. If I had to pick one to start with, I'd say the Steve Blank book - The Four Steps to the Epiphany. He does a pretty good job of giving an overview of market segmentation strategies, which you'll probably want to pursue if you're entering a crowded market.

After reading Blank, I'd go for Crossing the Chasm next, then the whole series by Trout, Ries and Rivskin, etc. The Michael Porter stuff is good, but somewhat dry and academic. The Understanding Michael Porter book is a good introduction to his stuff that is a little easier to digest.

Also note a subtle, but important point... there are two different kinds of "positioning* you'll hear people talk about in these kinds of discussions. On the one hand, you have "marketing positioning" as described in the books by Ries, Trout, et al. This is more about the message you send to the market about your firm and your offerings. Then you have Michael Porter "structural positioning" stuff that relates to how your firm "fits" in with your competitors vis-a-vis the "five forces" and the rest of Porterian strategic analysis. One will influence the other, but they are really two different things. Note that anytime somebody starts telling you anything about your "positioning".

And then you have what Bob Parsons (of GoDaddy fame) said "Don't be afraid to enter a crowded market, just be better than everybody else".

Thanks for your reply. Thats a great list of books. In fact I did a whole course of macro and micro economics so I do understand some of these concepts. But now when I am really trying to implement it, it doesnt turn to be that straight forward. Except the last line from Bob Parsons does stand out.

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