No one likes waiting in line at a restaurant, watching other people get seated as the smells of freshly cooked food waft past. But while waiting your turn sucks, especially when you’re hungry, a crowded space is often a positive sign. It means you have chosen a spot that lots of other people seem to find appealing.
The same goes for startups. The startup ecosystem is arguably getting more crowded, as inexpensive and accessible design tools arrive on the scene and accelerators pop up around the globe to offer funding, R&D facilities, and mentorship. Increased competition creates challenges, especially when you’re trying to grow a consumer base, scale, and raise funding. But it can also validate that you’re working in a popular, profitable space with lots of potential.
The temptation may be to see competitors as enemies, but there are benefits to working in a crowded market–as long as you keep these three things in mind.
When we launched our company, we underestimated the number of competitors we’d be up against by about 500%, and that affected our financial projections. Unlike with other industries like construction or real estate, there’s no central startup authority that companies need to register with. Anyone can launch a startup from their bedroom, and just because you can’t find them all with a Google search doesn’t mean they aren’t out there.
It’s a good idea to keep an eye on startup discovery platforms like Product Hunt and BetaList, and use tools like Venture Radar that use web crawlers to look for impending launches.
However, the most foolproof method of monitoring new competitors is by speaking with investors who know what’s going on in a given industry. Companies launch, market, and scale in different ways, but at some point, just about all of them will need funding or a mentor, and that’s when they’ll bring VCs, angels, or accelerators into play.
To make sure you still have a competitive edge, you obviously need to stay up to date with competitors and what they’re up to. Sometimes the best ideas come from your competition. Remember how Uber just happened to announce Uber Pool days before Lyft unveiled Lyft Line in 2014?
This doesn’t mean you should copy your competitors’ business models, but it’s still crucial to adopt the best features of whatever’s being introduced into the market while avoiding others’ mistakes.
It’s a natural instinct…