How many companies do you think the infighting fails?
How much struggle due to developments in the industry beyond the influence of the founders?
Then, how many fail because the result is only insufficient?
If I were to go astray, I will suggest that your answer to all the questions above is “many.” Perhaps you were part of such a plot.
But have you ever thought about how many companies lose because they never even know who, or what, they are up against?
My monetization is distressing.
I founded a fantasy football business back in the days. The game wasn’t monetized at first. Then on a freemium basis I monetized it, and it was successful. I expected my monetization to be diversified—and to hit a wall.
My thought was that once people are ready to invest money on fantasy football, they would also spend money on other sectors. All the research and information I had gathered was directed in that direction. I then began merging relevant advertising and affiliate services into other sports applications, statistical games and websites for betting.
After a few months of trying, I made a resounding disappointment. The needle wouldn’t budge regardless of what I did. My users also spent money on features in their game, but didn’t care about content and promotions from outside. It took me a bit to understand what the issue was.
I did well as a fantasy game and I competed against other fantasy gamers. I’ve got some competitive edges and I’ve used them well. But I immediately competed against trillion-dollar betting firms, online casinos and even newsagents when I began researching other monetic alternatives.
Legendary investor Peter Lynch used this word to explain the method of making the bottom line poorer by attempting to diversify your income sources. Big firms still have extra cash and waste it foolishly on investments and exotic new technologies.
In my situation, I spent a lot of time and money on new revenue sources while my core commodity should have been improved.
You will make the same error by changing your thinking about competition in your startup.
Who do you compete with?
Your market is not just like goods. Not all goods that solve the same problem are necessarily the same.
Your contest is something that occupies the same hole.
You eventually compete for the time and money of others. Most individuals (with or without consciousness) split up their time and energy into many categories: work, recreation, families, hobbies, desires, travel etc. These segments intersect and form a complex network where it is difficult for you to decipher which category you are fighting for exactly. And the puzzle rests therein.
Here are a couple of illustrations that demonstrate this.
You compete for the time and money at an intersection of schooling, networking and status if you run a university. So who are you up against? The quick response is “other colleges” or online learning sites if you are looking a little beyond the box. But online learning sites rely mostly on the education sector and deliver little in terms of networking and status. It is here where peer-to-peer learning comes into play, as well as boot camps, accelerators and many other ways of self development. They grab vast segments of this market without even noticing universities.
If you own a tourist agency, you largely compete for the time and money at the crossroads of entertainment and tourism. So you don’t just deal with movement from A to B. You will have to do with escape, excitement and adventure. So, to whom are you competing? Other travel agents, of course. Of course, games, augmented reality and smartphones make it possible to plan solo trips.
Take a minute to see how vacuous you are in the lives of your clients and how other companies from other sectors occupy the same gap.
Competition: intelligent diversification
If you have outlined the hole, it’s time to think how you can overcome the rivals.
Smart diversification is a technique that also works. This ensures that you can deliver a mix of goods and services that is larger than the number of its components and thus simplifies the lives of the consumers.
Let’s return to my case. The partner advertisements in my sports fantasy game played poorly. This is because I tried to fill a hole that my customers filled elsewhere. Then I went back to the drawing board and wondered what other ways my money could be diversified. I came up with one way that offered a different style of competition, effectively a 1-on-1 match-up that was not related to the regular game of the Fantasy League. It succeeded because it took into account the willingness of my customers to compete and found it easier to fill the gap in my website than to launch a new account elsewhere, to re-network, invite people and so forth.
This has improved my status in the sports fantasy industry and it made it harder for anyone to compete with me.
How to compete: Concentrate
Another way to compete is to centre your efforts 100% on your main product and strengthen your understanding of consumers. This is the most common-sense approach and you can do the best you can.
Eventually, though, it makes development impossible. If you spend 10 years doing that, your rivals probably may still have filled other gaps in the market so it will be harder for you to diversify at that time. This actually occurs where there is a lot of disagreement – when businesses with a proven history attempt to diversify at all costs and end up losing lots of resources.
Too narrowly think about rivalry places you at a serious disadvantage. Investments and efforts that appear to make sense before you bring them to the test are easy to get carried away with.
As a startup contractor, it is possible to paint yourself financially in a corner if you are not patient.
Think always about who you compete with, how vacuous you are, and how you can flourish without getting divorced.
Also Read: Start A Business From Your Phone