Many Entrepreneurs Define Competition All Wrong–and It’s the First Step to Startup Failure

Knowing your landscape is the single most important step to building a differentiated product, and most entrepreneurs skip it.

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There are endless necessary steps needed to start a venture. Some of them are enjoyable. Others, like competitive analysis and the construction of a sound financial model, are not.

Many of us like to skip those stages, because, well, they’re a whole lot less fun than planning the launch party. However, often times, those initial steps are the ones that differentiate the winners from the losers. Without knowing your landscape, the chances of you building a truly differentiated product are slim to none.

If I had a dime for every entrepreneur who called me with an idea they had, decided to go all in, spend money and resources, and launch without even knowing any of the competitors, I would be able to single-handedly fund them all.

The worst part, is that when I do ask the question “Who are your competitors?” I get the answer “We have none,” nine out of ten times.

I tell every single person who tells me they have no competitors to go back to the drawing board and spend a month doing competitive analysis. If you think you have no competition, you are either very wrong or there is absolutely no market for the product you are building.

Either way, you need to stop building and start analyzing–because you might be building an undifferentiated product.

Who else is fighting for the attention of your audience?

Right after the entrepreneur tells me they have no competitors, the sentence that follows is usually: “There are many companies in the space, but no one is doing what I am doing.”

My response? “That doesn’t matter.”

I sat with a very young startup founder years ago who wanted to build a photo sharing platform. When I asked her if she realized just how big Instagram was and if she was truly prepared to compete with it, her response was something along the lines of “No, we are different than Instagram because of this filter we have. Instagram doesn’t have it.”

Obviously, that filter is irrelevant and not enough of a differentiator upon which to build a successful company. That is an extreme and obvious example of an entrepreneur getting it wrong, but many make the same mistake, just in a less obvious manner.

The fact that no one is doing the exact same thing as you does not matter. Your pitch, your value proposition, and your target audience matter. Take a look at those things and now find others who are competing with you on those.

If you are pitching a large publisher by promising more time on page if they integrate your product, and another company who has a totally different product is promising the same thing to the same publisher, you and that other company are direct competitors.

More broadly, if you are building a network with a social component that requires users to upload content to your platform, like it or not, you are competing with the big boys. At the end of the day, that publisher won’t use many different tools to keep readers on the page and users don’t have unlimited time throughout the day to spend on social.

If you want to bring users to your social platform, you need to bring them from somewhere. This is a zero sum situation. Given the amount of time consumers spend on Facebook, Twitter, Snap, Instagram, and others, they are not adding another one. You need to take them away from Facebook and onto your site. That’s competition.

People’s attention is valuable because demand far exceeds supply.

Getting someone, whether a person or a business to use your product means you need to capture their attention. Before building your actual product, ask yourself who else is trying to capture the attention of the demographic you are targeting.

Build yourself a comprehensive competitive landscape of every single company in your space, and by “in your space,” I mean every company competing with your for attention. If you have your doubts about a certain player in the space, ask yourself who they are targeting and with what pitch. If their target and pitch is similar to yours, add them to the map.

Know your landscape, then take that knowledge to the product team.

Once you complete the competitive landscape, take a good look at it, study it, memorize it, and ask yourself “Now that I know who I am up against, am I differentiated enough to succeed? Do I still want to do this?”

If the answer to those questions is yes, then now–and only now–you’re ready to start the long process of building your venture.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.

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