In the notoriously competitive tech industry, it sometimes feels like your idea is dead before it makes it off the cocktail napkin. No matter the product, someone else always seems to get there first. About 100 million businesses launch annually. That’s three businesses per second! While there may be 99 failures for every successful startup, fierce competition shouldn’t discourage you. It’s actually a sign that there’s a market for your product. And thriving in this crowded space means knowing who your competitors really are.
Compete With the Right People
Potential customers, investors, and employees will always ask about your competition. Saying you have no competition signals that you don’t know the landscape. If there were no competition, you wouldn’t be seeking investors or customers.
Not every company with a mission vaguely similar to yours is competition. Many startups obtain unicorn status regardless of the strength of their customer bases. But when the investing bubble cools, startups will feel the strain of actual revenue demands.
Valuations aren’t always good indicators of success either. Slack, for example, has a valuation of $2.4 billion, although its annual revenue is only $64 million. It may still be in growth mode, but stacked up against competition like Facebook for Business, which has 44 times the price-to-earnings ratio and a massive customer base, the darling of the unicorn world faces an uphill battle.
Know Who You’re Up Against
Your real competition might be hiding behind the big-name companies. Look passed valuation to those who have customers, attract huge downloads, and are consistently mentioned by influencers. Try out their products and talk to their users. Identify their products’ pros and cons and what differentiates your product from theirs. You’ll also figure out whether there is investment interest in your space by pinpointing who has gotten actual investment dollars, how much, and from where.
You can also build a top-notch team for long-term success when you know what worked for companies that successfully gained customers and grew their revenue. Here are four steps to make sure you’re discovering your true competitors:
Engage Your Network
Tell influencers in the space (and the investor community, if you can) what you’re doing and what you’re trying to find out. Reach out, read their materials, and get involved with their posts. The information they possess and their willingness to help can exceed expectations. It takes work, but it usually pays off.
Follow the Code
Everyone loves to cover the startup world. You’d be surprised what you find through sites like Quora, Glassdoor, and even Tech.Co. Search for startup topics to find out who’s getting top-tier speaking slots at tech conferences, who’s gotten funding recently, or who just laid off employees. And if apps are your competition, read and analyze the reviews on iTunes and Google Play.
Use a service in your price range to obtain basic traffic metrics to domain, app usage, engagement, and even transaction information. Some companies might be out of reach for new entrepreneurs, but there are affordable options.
Competing in the tech industry is tough, but not impossible. Valuations are impressive, but without strong customer bases, those startups aren’t worth your time. Make sure you know who your real competitors are.