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When Having No Competition is a Problem

I quite often talk to companies that tell me that they have no competition.  In my mind this statement doesn’t make a darn bit of sense.   After a longer conversation we usually end up talking about the competition in a more realistic way.  My conclusion is that having “no competition” is either a very good thing or a very bad thing depending on how much you have studied your competition, how honest you have been about your capabilities and those of your competitors and how compelling your value proposition really is.  Here’s what I’ve learned.

What it really means when you say you have “no competition”:

1.  No competitive analysis has been done – Ignorance is bliss and as long as you don’t happen to run into a competitor then you can safely assume there isn’t any – right?  Right?  In fairness I have only seen a couple of very, very early stage companies that have had no knowledge of the competitive landscape at all.

2.  There are competitors but they “don’t count” –This one is more common for startups in emerging markets where the competitors are other startups or small initiatives inside larger companies.  The argument usually goes like this – “But competitor X only has 3 customers” or “Microsoft has a competing product but it sucks.”  Yeah well, you don’t have many customers either and the last time I checked Microsoft has an amazing ability to sell stuff even if it happens to be a little sucky.

3.  You have defined a segment where your solution clearly wins – Some companies have done their homework, understand and take the competition seriously, and have defined a segment with an urgent unmet need where they can clearly differentiate themselves and therefore, within that segment, there is in essence, no serious competition.  If this is you, congratulations, you rock.

4.  Your real competition is ‘Do Nothing’ – If this is the case then you are most likely in very big trouble my friend.  If doing nothing is more compelling than buying and deploying your solution, then there is no market for what you do.  In presentations to VC’s that I’ve done, they often ask the question “what is the compelling reason to buy?”  This is another way of saying “Your prospects have been doing fine so far without doing anything.  Why would they buy your stuff when they could keep doing nothing for free?”

The trick in all of this of course is to make sure you are truly case #3 and not actually case #1, #2, or #4 pretending to be a #3.

The first step is to look in the mirror and say this “I have competitors, and doing nothing is one of them.” Then take it from there.

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  1. Great post, and I think #4 seems to be way more common than #3. Unless I was clearly #3 and I had something that people clearly needed, I’d much rather have a little competition (where I hopefully have some differentiators) to justify the market than be playing ball against the status quo.

  2. Hi Bill,
    Thanks for the comment. I agree with you. I get really nervous when I don’t see any action at all in a market because it makes me think I’ve missed something and there is a compelling reason NOT to buy that I’ve missed.

  3. April: you forgot one – “do something else”.
    Case in point: I worked for a company that was selling cheap products into China in the hopes of selling them expensive testing gear after the sale. Well we made the sale, but then to our surprise they didn’t buy our testing gear – they just tested all permutations by hiring a huge number of people to do mindless testing. It turns out that this was much cheaper!
    There are no problems that you can’t solve with 1B people it turns out.
    – Dr. Jim Anderson
    “Home Of The Billion Dollar Product Manager”

  4. There is niche, but then you are competing against non-use.
    If you have somehow capture more than 74% of the market, hey, start looking around for the antitrust lawyers. If your competitors don’t add up to 26% of the market, you need to foster competition. Besides, a market is easier to make if there are more competitors, rather than less.
    You have to build a category and a market. Get help. It’s a matter of coopertition.

  5. Hi David – thanks for the comment.
    Don’t get me wrong, I love a niche strategy, just don’t tell me there are no competitors because there usually are general purpose competitors in a niche. Competing against non-use is OK as long as you are sure that there is a compelling reason to buy, otherwise you are dead.
    As for becoming a monopoly, well, I think I would love to have that problem 😉

  6. A possible variation to #3 is “entered a segment” vs. “defined a segment”. This is to include the companies that have come into a previously defined segment with the intention of beating the existing competitors.


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