What Can You Learn from Your Competition?
I will be giving the keynote at the Pre-Event Kickoff for Jacksonville Startup Weekend today and I am going to speak on a simple, but valuable concept – learning from your competitors. Last year at the Startup Weekend for North East Florida I was honored to give the keynote. I am proud to say that I am slated to give it again this year at the 2013 Startup Weekend on January 25th.
Understanding of the Consumer’s Need of Your Product
This is obviously of the utmost importance. If you cannot clearly and simply identify your consumer, you do not have a product. I speak in great depth about this in other BLOG posts so I will not go into detail on it here. But I will refer you to the following blog posts for reference:
Understanding the Market’s Need of Your Product
At Last Year’s Startup Weekend I focused on how start-ups need to consider the larger market ecosystem surrounding their product. At the time, I was the Chief Innovation Officer for GuideWell and we were making plans to build our own start-up accelerator. We also had an active pipeline of ideas that we were watching the market for with the intent that we would make an informed build, buy, or ally decision on how to proceed.
During the discussion at Startup Weekend, I attempted to elevate the attendees thinking about their product so that they considered how it fit inside the prioritized needs of the existing marketplace. This is especially true in the healthcare space, where market entry is difficult and reliance on the existing infrastructure is of utmost importance. I asked them to consider if the product had viability to a large insurer like the one I worked for, and if so, would the best path forward be as a vendor or to outright sell it. I cautioned them that being a product vendor of a multi-billion dollar, highly-regulated company is high on the impossible side for a start-up, and could ultimately bankrupt them trying to get up to compliance with a long list of requirements and regulations. While this can be viewed as very unfortunate, it is nonetheless true.
Instead, I planted a seed for them to consider approaching large companies with the intent to sell their product and its IP in its current state. This form of exit strategy, I believe, will become more viable over the next several years. It allows the entrepreneur to acquire cash and most probably a retained contract to further develop it for the legacy company. Of course, that too comes with its’ own set of difficulties.
Understanding Your Competitors Position Against Your Product
I wanted to make some additional points on the need to have a greater understanding of the market and your product’s place in it. Today we will look at what we can learn from our competition. Here again, I advocate that if you cannot clearly and simply identify your competitors, you do not have a product. Even product category inventors like Ford and Apple have competitors.
Henry Ford, the inventor of the automobile, was once quoted as saying “If I had asked people what they wanted, they would have said faster horses.” While this may contradict the points I make around properly identifying your minimum viable product, at least it points to the fact that there is always some form of competition. I add to that the notion that you can learn a great deal from them.
My absolute favorite writing on this subject is from the blog of Marc Hedlund, the founder and CEO of the failed start-up Wesabe. His cautionary tale is entitled “Why Wesabe Lost to Mint .” Both Wesabe and Mint were/are online financial tools that puts the users’ bank accounts into one place, sets a budget, tracks their goals, etc. In 2009, Mint was acquired by Intuit (the makers of Quicken) for $170 million – not bad. Even with a year head start, users, press, and revenue – Wesabe lost to Mint and closed its doors forever. Why?
In his post, Hedlund bravely looks at the mistakes he made that led to being beat by Mint. In essence, he boils it down to Mint’s superior efforts in creating a simpler and more automated tool for consumers. Wesabe’s product features went deeper but required more user input and manipulation. Mint’s product features started at a much higher level but gave the appearance to the user of full automation. Hence, Mint was easier to use – so more people used it. By the way, since 2007 Mint has added all of those “deeper” features, and so much more. The lesson here is (in my opinion), it is better to win today with less, and add more tomorrow. This is the heart of the minimum viable concept model.
Hedlund and the team at Wesabe were mistaken in their interpretation of what their consumer’s minimum viable product actually was. They learned it by watching their competitor, but they learned it too late. Today’s start-ups must be nimble enough to quickly recognize market needs and pivot to ensure they always serve the customer best.
Final Words
So I ask all you entrepreneurs out there, particularly in the healthcare space, to take heed of my words and think extensively not only about who are your customers, but who your competitors are and what you can learn from them. You can see the deck I presented with here.
To your health,
The Team at imagine.GO