Why Entrepreneurs Are Bad At Finding Their Competition

Because sometimes investors run the following algorithm:

Q) Do you have many successful competitors?

A1) No -- then why isn't anyone succeeding in this space? Maybe it is too ahead of its time but most likely there's a reason no one can make it work. In any case, I'm out.

A2) Yes -- in this case look at how much competition you have, it's too hard to break in now. It's a very crowded space and you won't be able to differentiate yourself. I'm out!

Proceeds to invest a couple months later based on liking the team and seeing who else is investing...

I agree in general (so many people, myself included, avoid finding competitors because it's like asking for bad news.)

That being said, it shouldn't take 20-30 hours. If you're looking for it but can't find it, there's something missing with the existing companies (execution, marketing, etc).

But make sure you know everything. Literally nothing kills a pitch or talk quite like not being able to answer the question "So it's like ____?", even if the mentioned startup turns out to be only tangentially related.

> "All ideas are second-hand, consciously and unconsciously drawn from a million outside sources, and daily used by the garnerer with a pride and satisfaction born of the superstition that he originated them." -Mark Twain

Of course someone already built your idea. You'll find 30 versions of it just be searching for suitable domain names. Take advantage of that. Your first 30 iterations and pivots are done before you even started!

If you go beyond the Yes/No of instantdomainsearch.com and actually look at what's hosted on the unavailable domain names. Click around the website. Become a customer. This is more useful "market research" than blasting out hundreds of SurveyMonkey surveys or asking people if they'd use your product!

> One of the most exciting times of being an entrepreneur is the very early days after having the idea. You discovered a pain point, created an awesome solution, and now you have a whole world of potential ahead of you.

Having an idea and building a solution is innovation, not entrepreneurship. "Entrepreneurs" are business people who take what someone else built and compete with other business people to sell it to the greatest market at the highest margins, then flog the business itself to some sucker just before it tanks. Someone who imagines and builds needs to be quite profound, whereas someone who takes and sells needs to be quite petty, so rarely do you find innovation and "entrepreneurship" in the same individual.

So I would say innovators are bad at finding their competition, which is the "entrepreneurs". Innovators often get a shock at how vicious "entrepreneurs" turn out to be when the product's almost ready. Even before there's a solution built, many "entrepreneurs" roam around looking for innovator victims who happily advertise what they're doing or even posting their software samples online. "Business is war" to the entrepreneur. Anyone in business who's building and trusting instead of stealing and fighting won't last long.

> I would google "Rideshare OR Carpool + Service OR Startup OR App"

How many of those search modifiers still work with Google, and does it give the parsing he expects? I haven't seen anyone do a search like that in a decade. I notice that removing the plus gives the exact same SERPs for example.

In general, you should do a competitive analysis before even thinking about problems or solutions. If you want to be an entrepreneur, pick an area that interests you and dig very deep in all the players and what they provide. Then learn about the problems (usually by using their solutions) and look for pain points that are missed and that you are well suited to solve.

At that point your brain will veer away from solutions that are already well covered and will naturally focus on the fuzzy areas that are being missed. But you know at least that you are dealing in an area that a) you enjoy (this is the most important) and b) your market is validated.

The key point you have to look out for at this phase, is your solution just a feature of some bigger product? In which case, you'll want channel partners / look for acquisition exits. Which, TBH, nowadays is often the easiest and fastest way to exit.

Depending on the market, 20-30 hours seems really low for thorough market research. Often times, when a market is super crowded, that means that there is a great opportunity because there really isn't a winner. Doing thorough research on tens or hundreds of companies, especially in opaque markets can be a big waste of time compared to focusing on what you are doing that is working.

Referencing AngelList and CrunchBase leads me to believe that this article is applying only to startups that compete with other startups but it is ignoring the bigger opportunity of changing existing markets.

I found this particularly insightful: "Startups are all about learning and iterating and failing fast, so competitors are a bunch of experiments that have already been done."

I'm trying hard to learn to getting to know the competition and appreciate it but it can be very discouraging to find out that your killer app is just another player in a saturated market. Nevertheless, I feel that I'm more honest with myself if I do a competitive analysis very early on; even one that takes a few minutes is incredibly useful.

Just because a competitor does a certain feature or something a certain way doesn't mean they iterated quickly, perfected it and you should copy. It could also be that they simply have enough customers they are scared to change anything for even the better and are stuck. At my last company we got to a point where the executives were happy making zero product changes to make life easier on our support team and not make customers mad due to re-training and causing new bugs.

Some others may be nimble enough to add whatever your killer feature is. But their management team or investors may want to keep with what works and not vary from that path.

Point is some companies are in different points of their life cycle. I think it is good to know who the players are but to use your own product vision to guide you. If you have no product vision and your goal is to just copy, well good luck with that. Why a product is built a certain way isn't something you can always figure out.

I agree on 20-30 hours estimate but in general, you just cannot sit down in a few days straight and find out all competitors. The reason is very simple: most of the time, you don't know the right keyword to search. This happened to me. I spent days searching for competitors. Then I thought I had a pretty good idea and started on coding. During that time, my head started to pop out with "alternative" keywords, not necessarily direct competitor keywords. Those are dangerous because again, most of the time, people already have a way to do certain things (i.e. alternative solution). So that 20-30 hours is just the tip of the iceberg. After you start reading blogs and talking to people, what you ended up having is a way better list of keywords to search for. By the way, don't forget to get ideas from Google Keyword Tool itself.

Every time someone approaches me about starting a company with a "brilliant" idea, I run a quick Google search and ask them, well have you heard of ___ or ___? 99 percent of the time they give up after that.

>An investor or friend shouldn't be the first one to tell an entrepreneur about someone new in their space.

This line resonated with me. I know the stomach-dropping feeling of someone mentioning a potential competitor that I've never heard of. I usually play it off and say, "Thanks, I'll definitely check it out" and then immediately Google it on my iPhone as soon as possible. Luckily, in my research I haven't found anything all that similar to what I'm working on.

This brings up a corollary question: Assuming I have a pretty well-informed view of the competitive landscape and I can't seem to find anything that solves the problem in a similar fashion, how do I sufficiently answer the inevitable question from investors about my competition? I've often heard people write and say that business ideas ALWAYS have competition, the tricky thing is that the competition isn't always immediately obvious. Answering that a startup doesn't have direct competition leads to skepticism, therefore creating distrust right off the bat when it may not be warranted.

As a quick tip for new entrepreneurs is simply to hire someone to do it on elance. For as low as 150-500$ you can get a very good summary of the market, the competitors, the market-size. You can ask to have it in a excel spreadsheet sorted by features, money raised, etc.

You should know who your competitors are, but focusing on them is a waste of time.

"The last thing you want is to find out that hundreds of other people have already thought of it and Andreesen just backed three of them."

This is a pretty naive point of view. Who cares if they are all startups.

Spend the time and energy this post recommends spending on your competitors and direct it towards your own customers instead.

Also see #4 here: http://paulgraham.com/startuplessons.html

I don't think "entrepreneurs are bad at finding their competition" as the OP suggests.

In my experience, "We don't have any competition" usually translates to "We are so differentiated from the competition that it effectively isn't competition." That's more often than not an unrealistic conclusion, but the reasons an entrepreneur might favor such a conclusion are fairly obvious.

Isn't this a just-so story? I don't see any reason to believe that more good companies do things this way than don't.