When you're a founder, sometimes the competition gets inside your head. Maybe there's a flurry of media coverage on your main rival. Maybe they raised a big round. Maybe a few major players in your market have partnered up, and you can't join the party because you're still in stealth. Now, you can't stop thinking about their business and how it might be better than yours.
"Obsessing over competitors takes the energy off your own work and gives it to someone else," says Aha! co-founder and CEO Brian de Haaff. "It is impossible to be great when your mind is elsewhere--lost in someone else's new features, market share, and growth."
Recently, my co-founders and I found ourselves in this position, a little too preoccupied with strides our competition was making. The following three exercises helped us tremendously.
Understand the downsides of being a first mover
Being a first mover can be a double-edged sword. Sure, it can be helpful to be first to market, especially when it comes to new marketing channels. It certainly paid off to be among the first 10 companies selling on Instagram or Clubhouse (versus the first 100,000).
But by being first, a company is also doing market validation for competitors (i.e., you), and it's faster and cheaper to iterate on features than to create them from scratch. Read your rival's negative reviews, and then allow them to inform your product and help you avoid making similar missteps.
As legendary investor Jason Calcanis (Uber, Thumbtack, Robinhood) once noted, "Google was the twelfth search engine. Facebook was the tenth social network, and iPad was the twentieth tablet."
If your competitor gained traction for a product while you're still in stealth, don't despair. Remember: Many market leaders were not first movers. In addition to the examples above, Zoom was not the first video conferencing app, Tesla was not the first electric car, and Stripe was not the first online payment platform.
To paraphrase Calcanis: You don't win by being first. You win by being the right product for your market, when your market is ready.
Size up the big picture
A friend of mine was anxious when a competitor appeared in a trade media article and announced a new milestone: It had hit a few hundred customers, with an expansion plan to reach 15,000 by the end of the year and then 30,000 by the following year.
That might seem troublesome to any new founder. In this case, however, the very credible total addressable market was five million customers. In other words, the competitor was moving quickly, but the market was still largely open.
Unlike sports--which have clear rules, defined winners and losers, and limited awards--business is an infinite game. In infinite games, there are no defined endpoints: Being ahead or behind today does not mean being destined to win or lose in the future.
So be aware of what the competition is doing, but also pay attention to the big picture, which extends far into the future. And ask yourself, "How does this event change my understanding of our market?"
Often, when a competitor announces a new event (an acquisition or a major partnership, for example), it is simply that: an event in their journey.
If a competitor raised money--and you already had figured that your market had enough appeal to attract a dozen other credible competitors--their good fortune is no reason to fret. Although it is indeed new competition, it does not necessarily change your business model hypotheses.
Lean into change
Sometimes a competitor's news may change your assumptions about the business. When that happens, use it as competitive insight for your own business.
If your rival finds a way to sell something for much less than you figured was possible, use it as an opportunity to rethink the cost structure of your business.
If they sell to a market you thought would not buy a product like the one you're selling, open it up as a new customer segment for your team to target.
Whatever you do, do not let awareness of your competition turn into an obsession.
If all of the above should fail for you, try what Jeff Bezos recommends instead: obsess over your customers. Unlike your competitors' opinions about you, your customers' opinions actually matter.