4 Sure Ways to Make Your Start-up Stand Out
Here's a dirty little secret about entrepreneurship: Almost everything has been done before—and if it hasn't, and you come up with an awesome, unique new venture idea, chances are you'll quickly find me-too competitors nipping at your heels.
Classically, you'd like to be able to come out far ahead against the five-forces benchmarks set up by Michael Porter: barriers to entry, limited competition, a growing industry, and a positive balance of power in terms of your relationships with your customers and your suppliers.
But the truth is that these forces don't usually line up, and yet as an entrepreneur you have to push forward and create advantages anyway—or else wind down and find something else to do.
So, if your service or product is in danger of becoming a commodity, what can you do to give yourself a leg up?
We caught up with Andrew Laffoon and Aryk Grosz, cofounders of the online custom photo book company, Mixbook, to ask them how they've built strategies to compete with larger companies in the same space. They've gone from an idea that Grosz developed with over a Quiznos sandwich to an 85-employee company with more than five million customer projects in the space of five years.
Here are the highlights of our discsussion:
1. Think. Then be ready to think different.
The earliest version of Mixbook was pitched to high school officials who, presumably, would buy it and allow hstudents to create collaborative yearbooks. But when Laffoon, 29, and Grosz 27, demonstrated what they'd come up with to one of their first potential customers, he pushed back hard—not because he didn't like the idea, he said, but because it would work too well and put him out of a job.
"I kid you not. His jaw dropped," Laffoon recalled. "Then he turned [and said], 'I will never, never, ever allow this in my school. Do you realize how many jobs are created by the yearbook industry? I have a mortgage!'"
Back at the drawing board, Mixbook's cofounders revamped their product, thinking of bigger markets—a creative, collaborate means to work on any kind of book—where users could share their work for free if they wanted to.
"We thought of bigger markets, that you could collaborate on any kind of book—baby, wedding, family reunions," Laffoon said. "We realized we had to go make money so we spent the last five years trying to learn how to do that."
2. See the white space.
Even though some of their competitors had lots of financing and marketing power—Snapfish is owned by HP, for example, and Kodak had a 100-year head start in the photography business—Laffoon said they realized the total addressable market was big enough that they could still have a shot at being a player.
"Our entire competitive set owns less than 5% of the addressable market. Even awareness of the category is low as a whole. So we thought there was a huge opportunity despite the competitive set," he said.
3. Move as fast as only you can.
As a startup, you have one pretty uniform advantage over established competitors: speed—speed in hiring new employees, making adjustments to your product, responding to customer concerns, and even acquiring competitors.
"Acquisitions are an easy one," Laffoon said. "In recent deals, in all of them there were at least three other offers. The reason we won was definitely not because we had the most attractive terms. It's because we move extremely fast. We go from talking about a deal to a term sheet in four hours."
4. Be really, really, really persistent.
Accept at the outset that you'll probably have to knock on hundreds of doors before you'll find the ones that open. Everybody says no: Employees won't join your company. Advisers will want you to change your plan. Customers won't buy your product. But if you can take that rejection as a gift—an opportunity to learn, improve and persist—it can lead to an advantage.
"We were told 'no' by venture capitalists over 50 times before we closed our Series A round," Laffon said. "They told us to change our business model, to change our technology, to switch markets, even to switch to a “video advertising” startup. Ultimately, our persistence paid off."
(Laffoon and Grosz are alumni of the Center for Entrepreneurship and Technology at the University of California, Berkeley, of which the coauthor of this column, Jon Burgstone, is the Founding Faculty Chair.)
JON BURGSTONE | Columnist | Professor, UC Berkeley
Jon Burgstone was co-founder of SupplierMarket, acquired by Ariba for $1.1B. He now teaches at Berkeley, where he helped launch the Center for Entrepreneurship & Technology. He is co-author of Breakthrough Entrepreneurship.
BILL MURPHY JR. | Columnist
Bill Murphy Jr. is a journalist, ghostwriter, and entrepreneur. He is the author of Breakthrough Entrepreneurship (with Jon Burgstone) and is a former reporter for The Washington Post.