Let’s get started with the challenge

Day 3: Discover friendly competition

Today's Prompt:

Find 3 companies whose business is most similar to what you are doing or want to do. These companies could be similar in their idea, their customer base, their products or service, their geographic locale, their branding or any other elements.

Competition is good.

One of the most common mental blocks we see people hitting with a new business idea is realizing that there's already competition.

It's the quickest way to deflate a budding entrepreneur. They have a fantastic idea in the shower, jump out still dripping wet, and head to Google. Disaster! Someone is already doing something similar. Oh well, might as well give up on that idea, right?

No! Competition is good.

Someone else using a similar idea or doing something similar is great news. This might seem counter-intuitive, but it's true. Today, we will look at why competition is great and why we should be excited to see companies already doing what we want to do.

The media and popular culture tend to focus on the idea of the "entrepreneur" – visionaries like Steve Jobs, geniuses like Elon Musk, and sages like Warren Buffet. Their stories tend to emphasize uniqueness. These unique people have unique ideas that they build into unique businesses.

By modeling our own businesses and ventures on the stories of people like this, we are tricked into thinking that we need our ventures to be totally new. Tech startups in particular fall into this trap; any derivativeness is frowned upon as copying.

The truth is that there's very little that is truly unique. The Bible had it right a couple thousand years ago: "What has been will be again, what has been done will be done again; there is nothing new under the sun."

Ideas that seem unique are nearly always some new combination of previously existing elements. Generally, the individuality comes from these elements being organized in a new way – perhaps combining two previously separate concepts into one new, distinctive idea. Try to think of an invention that did not have an antecedent. It's genuinely difficult. Most "revolutionary" products and inventions are merely evolutions of previous advances.

All of this sounds quite negative so far. Even if you believe there's nothing truly "unique," that still can’t mean competition is good, right?

Let's get back to you jumping out of the shower and Googling your new idea. You've found a handful of companies that do something similar. You're bummed out now, right? Why should you listen to us and believe that this is actually a good sign?

Competition means that a market exists. The fact that there are other people doing something similar and (presumably) making money means that there are customers who are willing to pay for your idea. Sure, they are paying your competitor right now, but those same people could be paying you once you've got your idea off the ground and out in the world.

Finding companies who do what you are interested in doing is a big sign saying, "There's money to be made here." In fact, the longer they've been around, the more sustainable the market and the idea must be!

Of course, there's a limit here. If the market is too competitive, then it might be hard to make a profit. But some competition is much better than no competition. The biggest risk to a new company or venture isn’t the existence of competition – it’s the lack of a market.

Marmite bean toasties

You might think that baked beans and marmite toasties are the best-tasting culinary experience available to man. Maybe they are – we can't judge. Maybe you eat your marmite and bean toasties every meal of every day, fantasizing about building an empire on your special recipe. You'll sell at football stadiums, set up a popup in Covent Garden, create strategic partnerships with both Heinz and Marmite, and take over the world with your recipe.

Lo and behold: there’s no competition! No one is doing what you do! This is genuinely unique. No one has your delicious recipe. No one is in the market selling this yet. It's wide open for you to jump in.

But, in this case, there is no competition because there's no market. Nobody wants your bean and marmite toasties; they certainly aren't beating their way to your door. The lack of competition – the lack of others doing the same thing already – should have been a red flag: There's no market; people are not interested in what you are offering.

Sensible Chinese

A personal example. My (Kyle’s) site, sensiblechinese.com, sells video courses to help people learn Chinese. When I first set up the website and recorded the course, there was really nothing like it on the market. I recorded the video course thinking about the huge sales figures I'd soon be making because I was bringing the first sort of course like it to the market. It chugs along making sales, but I'm certainly not going to be retiring on my riches to swim in my Scrooge McDuck-style vault of gold coins.

Instead, this should have been a warning sign. There's nothing in the market because there aren't many people who want to buy something like this. I found this out too late. There are only around 100,000 English speakers learning Chinese at any particular time – not a large market. By comparison, the number of people learning French or Spanish is in the tens of millions.

There wasn’t competition because either a) people had realized the market was too small to bother with starting a company or b) they had started companies and then realized the market wasn't large enough to sustain a business. Either way, same lesson – no competition doesn't mean the market is ripe for the taking; it means it is very likely barren.

Don't sweat the idea

What does this mean in practical terms? It means that, if you have an idea and fear that is too "similar" to someone else's, then there's no need to worry. If someone has already built a business on a related idea, that means you have a good idea. The question now is how you also build a business.

The simplest way is to do exactly what your competition does but better, cheaper, or faster. Or some combination. But generally, it's more productive to find a twist on the idea. Take it offline and local, or move it online and global. Focus on a narrower customer base, or widen your customers. Focus on the core product, or shift to the add-ons. There are so many ways to take an idea and tweak and change it until it becomes something better, something unique, even if the starting point was the same.

Apple, Microsoft, and IBM all had the same basic "idea" of providing the world with personal computers – the results were very different.

Finding Competitors

Today, you are going to find 3 competitors who do something similar to what you want to do.

They could have a similar product or service. They could be operating in a similar geographic location. They could be similar in terms of their vision and goals. They could be similar in branding. There are many vectors of similarity that they could follow.

If you know one competitor (and they have a website), then take their website and enter it here: https://www.similarweb.com/corp/similarweb-and-compete/.

Similarweb.com will generate other companies that are similar to your competitor, and thus may be similar to your business as well. Ideally, the list’s length will hit the sweet spot – enough companies that you know that there’s a market for your idea, but not so many that the market is flooded with it already.

In fact, if there aren't any, that raises questions. Why is no one else doing this? Is there no market here?

But surely there will be some, and studying those other businesses will help you form some of your own ideas.