Secret #3: Is Your Kung Fu Strong?
As seen on LinkedIn
(This is the third in the 12-part series, “12 Secrets To Attracting Investors To Your Startup”)
Secret #3. Is Your Startup Kung Fu Strong?
So you’re off to the races, creating a clear and elevating solution to a singular problem you’re passionate about solving. Congratulations! Per our 12 Secrets, you’re already ahead of a good 16.6 percent of your would-be competition. But what of the other pesky 83.4 percent? How are they going about tackling your problem? How are they going after your customers? How are they structuring their investor pitches? Incentive plans? Happy hours?
The Grass Isn’t Greener…But It’s Distracting And Demotivating
There’s a difference between healthy, competitive intelligence and unhealthy…let’s call it “competitive infatuation.” In the same way that neighbors would be wise to avoid trying to keep up with the proverbial Joneses, startups ought to resist the temptation to overattend to their competitors. Why? Because doing so risks positioning you as a reactive game player instead of a proactive rule maker. Venerable writer and game designer (i.e., rule maker) Neal Stephenson shares this perspective in his 2011 article in Wired Magazine titled “Innovation Starvation”:
Most people who work in corporations or academia have witnessed something like the following: A number of engineers are sitting together in a room, bouncing ideas off each other. Out of the discussion emerges a new concept that seems promising. Then some laptop-wielding person in the corner, having performed a quick Google search, announces that this “new” idea is, in fact, an old one — or at least vaguely similar — and has already been tried. Either it failed, or it succeeded. If it failed, then no manager who wants to keep his or her job will approve spending money trying to revive it. If it succeeded, then it’s patented and entry to the market is presumed to be unattainable since the first people who thought of it will have “first-mover advantage” and will have created “barriers to entry.” The number of seemingly promising ideas that have been crushed in this way must number in the millions.
TL;DR: If it’s already been done, it’s not worth doing. If it hasn’t, it’s…still not worth doing. Not particularly elevating. If overfocusing on your competitors’ every move is a recipe for pessimism and inaction, what’s an optimistic, proactive entrepreneur to do?
Master Your Craft
Simon Sinek taught me: “People don’t buy what you do; they buy why you do it.” Customers commit to your product or service if there’s reason to believe that it’s an expression of your authentic values and purpose. Here’s a build on that: By relentlessly cultivating your customers’ “reason to believe,” you’re simultaneously signaling a “reason to stand down” that can deter potential copycats. The first defense is a good offense.
Bruce Lee, martial artist extraordinaire who knew a thing or two about competitive defense, once said: “Fear not the man who has practiced 10,000 kicks once. Fear the man who has practiced one kick 10,000 times.” Your job as a startup founder is to master your solution’s singular “kick” (product-market fit). With sufficiently demonstrated mastery, fellow warriors far and wide will fear (ahem…choose not to compete with) you because they can’t simply hang with your kung fu. Keep it up and you’ll begin to attract the attention of the Shaolin elders of Mountain View who might extend you an invitation to join their order at their temple.
Alas, we’re getting ahead of ourselves. Just as every journey begins with a single step, so I ask you to commence with your study of the Furious Five Forms below.
The Furious Five Forms (a.k.a. Five Dimensions Of A Startup’s Competitive Defense)
1. Expertise (What you know): Master your craft to such an extent that savvy foes stay out of your business entirely. “The greatest victory is that which requires no battle.”
2. Relationships (Who you know): Trusted relationships are a finite resource. Your unique relationships (with vendors, partners and, especially, customers) are yours and yours alone. “If you do not seek out allies and helpers, then you will be isolated and weak.”
3. Trade Secrets (What they don’t know): If you have a truly innovative (read: new and better) differentiator, keep it quiet. You can happily outperform the market until someone figures out how to replicate it. The Coca-Cola recipe has been a trade secret since 1886!
4. Network Effects (Who’s where): Engineer virality and stickiness into your offering from day one to ensure that first-mover advantage gives way to sustainable advantage. You could build technically superior platforms to Facebook or eBay, but good luck moving everyone over to the new digs.
5. Patents: Finally, if others could easily replicate your approach, and given enough time and treasure, outperform you, I’d recommend filing for a patent as a competitive safeguard of last resort. The inefficiency of modern patent law notwithstanding, sometimes it’s comforting to know that you can call in a grown-up (read: the government) to settle your fights.
Bottom line: We prefer to invest in companies whose solutions are rooted in hard-won, unique experiences that yield hard-to-replicate expertise and relationships. Trade secrets, network effects and patents further strengthen the story.