Technology entreprenuers are prone to saying “We don’t have any competition” or something like “our service will out-google google”. Both are silly and naieve – and impossible to believe. I fell into that trap when I first devised the scheme for rVibe in 2003. At that time I thought it was true. Of course, as an application with p2p underpinnings, it couldn’t have been farther from the truth – can you say Napster?
You have to know your have competition, and you have to know how you’re better. And in the consumer space, why people will choose you over the competition. But the thing that I think is so interesting about competition is the fear factor on startups. Competition is terrifying. Nobody really wants to compete – becuase nobody wants to lose. It’s that risk averse part of all of us. And this is true for investors as well.
However, I like think about competition differently. Competition is an indicator of market presence and also helps you steer away from pitfalls. If there are serious competitors (and even better if they are making money), then that typically means there is a worthwhile market and that you’re not off your rocker for wanting to enter it.
But the thing I love most about competition is this: Competitors find the problems for you. Even the most successful competitors have issues, or gaps or things they missed. I am sure we are no different, but it’s so nice to see what other people are doing – it’s so much better than not knowing. Allow them to make mistakes, or narrow their focus to something specific. When they do those things, that shows the way to a new product, market or opportunity. Likewise for competitive response – it tells you where you may have gone wrong and how to address the issue.
The thing missing in the online music space? Well – one of the many anyway – a music client with social networking, rewards, free and paid streams and all the normal player functions.
And by social networking, I don’t mean it as the total focus, I mean it as an integrated part of the application experience. Music is a social experience, and so is software (note – it’s part of the experience – it’s not the experience).