The Myth of Competition

Not a day goes by when I don’t hear a seed stage founder worried about competition. We are hard-wired as humans to think of the resources of the world as a zero sum game. But competition is a myth for seed stage companies. Logically, even if you have some huge competitor, if you find an extremely strong need in the world that’s slightly different than the problem they solve, you are fine.

I remember in my first company, NetGravity, worrying about whether Microsoft or Netscape would introduce adservers. It kept me up at night. And guess what, they both did! But people loved our product, we were totally focused on it, and people bought our product. A different version of this story is true with competition with other startups. Neither of you is very powerful, so you can’t take away all of the oxygen from the other, if the other has product-market fit. There will simply be too many people telling each other about their product.

Of course, at some stage, maybe around your IPO, this competition starts to affect your positioning and TAM, but on any original product, you should put aside all of those zero-sum biases and realize that you are playing a positive sum game, people may well buy both your product and your closest “competitor” if you both have solved a key problem.