Know thy Competition

You have to be aware of your competition in order to establish customer value and differentiate yourself. That premise applies even to books like The Titanic Effect: Successfully Navigating the Uncertainties that Sink Most Startups. So, it’s time for us to take a look at our competition.

Most retailers are a bit of a “walled garden” in that they have lots of data they don’t share with the vendors whose wares they sell. This includes books. What we do know is which are the best-selling books in the categories of “startups,” “new business enterprises,” and “starting a business.” Of course, which specific books are in the top 3 to 10 do change over time. But for the last year, two books have held steady in the top 10, typically at #1 and #2. They are Peter Thiel’s Zero to One and Eric Ries’  The Lean Startup. So, let’s look at what makes our book different from these.

Our overall approach is different. Like many books on startups, both of these books tell founders what they must do. In The Titanic Effect, we try to share what not to do. Said differently, we identify potential decisions, that if made, can create future problems, and we recommend ways to navigate around them. 

Product Development. These two authors could not be more diametrically opposed about the best way to build a product offering:

  • Zero To One advocates that founders invest heavily in their product development because they should have the goal of delivering 10X better functionality to customers. To have that kind of performance improvement takes investment in technology and systems that offer much, much more than customers have today.

  •  The Lean Startup suggests that the startup’s vision function as its true north, but that the product is more of a hypothesis. The goal is to offer an MVP (minimally viable product) and experiment until you get a product that the market wants. Then, continue experimenting to finalize product functionality.  

The Titanic Effect  suggests something in between. Launching an MVP is an accepted norm in startups. So, we start with the premise that is what a startup will do. But, we advocate for approaching the product by finding functionality that is worth paying a premium to get. We don’t specifically advocate for a 10X improvement. But, that’s a good goal to shoot for. It might be too hard to achieve 10X. So, at least go for 2X.

Customer Focus. Both books suggest focusing on a customer segment to start, as do we. But, they each have a different approach about how to find a segment:

  • Zero To One suggests finding a niche you can dominate. Then, dominate it. The combo of a niche that has a high need for your 10X functionality is what gets you monopolistic profits (think – they’ll pay the most). An example from Paypal: They wanted to make electronic funds exchange easier. So, they looked for people who had a lot of electronic funds exchanges = eBay sellers. There were only 20,000 of them. They had high need and were easily identifiable. That’s a niche that easily dominated. No surprise that eBay ultimately bought PayPal. 

  • The Lean Startup suggests finding early adopters. This idea originates from marketing researchers at MIT who recognized that early users have great ideas about what product improvements would be good. The early Zappos is an example – the original founder could not find a specific shoe he wanted at the store. So, he took pictures of shoes, put them on a website, and asked his friends to buy their shoes online instead of at the store. He was the early adopter and knew others. The challenge with this approach is figuring out where these early adopters are.

Once again, The Titanic Effect straddles these two approaches. We also suggest startups focus on a single segment of customers. We suggest figuring out how to get 80% adoption within the segment. That’s a great definition of “domination.” But, we also describe how to look at the whole market to figure out what a good segment is. You have to be able to find people in groups. Searching for early adopters is a difficult process. You need to strategically figure out what characteristics make people early adopters in your category. Or, skip early adopters and figure out what groups of people have the highest need. The way you find a segment isn’t as important as focusing on a single segment to start. 

All three books acknowledge that the key to success is getting to product/market fit fast. The question becomes what is the best way to do that. Zero To One suggests that this can be planned in advance using traditional business planning approaches. The Lean Startup is more fluid as it describes 10 different kinds of pivots that a startup can make as it gets there. We caution against too many pivots because each of them have unintended consequences which become hidden debts. But, startups have too much uncertainty to perfectly map everything out through a business plan. The key is to find the balance – make some plans, be prepared to change them, and get to product/market fit as quickly as you can. 

It’s worth checking out all three books. To get your hands on The Titanic Effect, join us at the book launch on June 12 to celebrate its release! Register here.