3 Competitive Blind Spots for Early Stage SaaS Startups
How much should you focus on the competition?
According to Jeff Bezos, not much:
We’re not competitor obsessed, we’re customer obsessed. We start with what the customer needs and we work backwards.
It’s great advice for SaaS founders to be more customer-centric than competitor-centric. Although the best founders tend to be very competitive, so I’m not sure that it’s possible, let alone desirable, to totally tune out the competition.
For example, it’s difficult to know if your startup has the best product without having a clear-eyed view of the competition. This is easier said than done! It can be difficult to be unbiased when it comes to matters involving competitors.
In the realm of SaaS startups, I’ve noticed three common blindspots that I’d encourage founders to avoid.
Time-shifted Competitive Comparison
Comparing my product against my competitor’s product, there is a natural, optimistic inclination to think of my product in terms of what it’s about to be. Sure, we have SSO! (It’s going to ship next quarter.) Yes, our product is very easy-to-use! (The new UI roll-out will be done in 3 months.) Etc.
On the other hand, there’s also a natural inclination to think about my competitor’s product in terms of their last release. That’s probably the last time I looked closely at their product.
But when I time-shift the comparison, comparing the future version of my product to the past version of my competitor’s, I’ve introduced major bias into any apples-to-apples product comparison.
"Winning” Your Competition’s (Worst) Customers
Beating a larger competitor on a deal is an achievement.
But closing a customer that has left a larger competitor is not always a sign of winning. Large, successful incumbent vendors regularly shed customers. Often, those churned customers are unusually cheap and/or needy. If you’re a startup, you probably want to have them as customers, but that doesn’t necessarily mean that you are out-competing the vendor they left.
Hiring Your Competitor’s Smooth-Talking (But Mediocre) Sales Reps
A mediocre sales rep from a competitor will often shine in interviews. Why?
Experienced sales reps are generally very skilled at presenting themselves.
They have market experience that allows them to sound far more knowledgeable than other candidates in the interview process.
But why is the rep from a competitor that’s interviewing at my startup likely to be mediocre?
Because your competitor will try very, very hard to keep its best reps. Top performers are paid well and have little incentive to risk trying to sell for a competitor. It’s possible that the competitor’s sales rep is a star, but it’s not likely.
Personally, I love competition. But the same drive that fuels my competitive energy also gets my neural circuits firing on overdrive when it comes to assessing my competitors. Good luck staying levelheaded when assessing your foes!