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Hi, I’m Brad Feld, a managing director at the Foundry Group who lives in Boulder, Colorado. I invest in software and Internet companies around the US, run marathons and read a lot.

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Use Your Competitors’ Products All The Time

Comments (38)

I was sitting with the founders of a company we’ve funded the other day talking about their competition. I love this product and I use it every day. It doesn’t yet have widespread adoption, but it as extremely actively used by the early adopters.

This company has several competitors – long time incumbents with somewhat stale, but useful products, and several new competitors, including well-funded and noisy ones. I use several of these products regularly in different situations and have encouraged the founders to use them also.

During our conversation, we started off by talking about pricing and go-to-market strategies. As part of this, we were talking through a strategy to change the current game being played in the market, both from a product and pricing perspective. We had clarity on the product side (we have several fundamental architectural differences that enable a powerfully different approach at scale) but thrashed for a while on the pricing perspective.

I realized I wasn’t very clear on the pricing strategies of the competitors so we went through them on-line. While this was sort of useful, our knowledge of their products, how they work, and what the current limitations of them are was more enlightening. Ultimately the product differentiation drove the pricing differentiation discussion, which resulted in our hypothesis about how to change the game which we are now testing.

If we hadn’t all be active users of these competitors products, we would have had a stupid conversation. While we have limited visibility into the competitors’ product roadmaps, we know how hard it will be for them to change several dimensions of their products. Sure, we should assume they can and will do this, but as we enter the market in a serious way, I think we can carve out a unique and very significant position for ourselves by leading with the product differentiation and supporting it with a pricing strategy that undermines theirs. In the absence of the product information we have from our experience using their products, we wouldn’t have been able to tie these two constructs together, and our resulting approach would be weak.

My general approach to competition is to “obsess about their products while completely ignoring the company.” If you can identify competitors, use their products continually, if only to have that knowledge when the moment comes that you have the conversation about how you are going to change the game.

  • http://www.Voxa.com/ Kyle Van Pelt

    This feels like such a “duh” moment. This is such a simple way to understand your market.

    Another point to add is how much this will help you sell your product to customers/investors when they ask about the competition, when you use the product all of the time it provides a ton of clarity.

    At what point do you switch from using your competitors product to “dog-fooding” your own product?

    • Nick Ambrose

      It is useful but you also have to be very careful not to let the competitor’s product start to drive your own.

      Your product works a certain way for a reason and its easy to get into the “we have to be more like X & Y” and end up losing some of what makes you better/different if you don’t take care.

      But yes, I’ve in the past taken quite a few ideas from competitors and (generally) improved on those into our own products.

      EDIT: Of course assuming you are in an industry where copying the competitions isn’t the actual goal :)

      • http://www.stevenkuyan.com Steven Kuyan

        I like the point that you made, I’ve seen this too when there are companies who start obsessing over new features that competitors introduce and feel that they need to implement them as well. Its a good way to overwork the engineering team while making the sales team go crazy understanding the vision to sell customers on.

        • http://www.feld.com bfeld

          Yup. I call this “follow the leader” and if you aren’t the leader, follow the leader is a crummy strategy. You have to change the game on the leader. If you want to do this, you need to really understand the leader’s game!

          • Nick Ambrose

            Exactly.

      • http://www.feld.com bfeld

        Very important point. I’m not a “fast follower” or “copycat” investor so the goal is not to figure out features to emulate, but understand the product in depth, what is good and bad about it, how it is presented to the customer / user, and how it is positioned. All of this is in the goal of building a better product, not simply copying the competitor.

    • http://www.feld.com bfeld

      I always dog food my own products – from day 1. I use them constantly in everything I do, and report back issues, suggestions, bugs, and ideas continuously. I like to think of myself as the best early adopter / user of anything I invest in.

  • Kelly James

    When I was a buyer for a well-known clothing retailer, we regularly went competitive shopping. This was before most were selling online so we went store to store. We wanted to see what products they were carrying, promotions they were having, displays, etc. We bought their products and would bring them to our office and put them on our fit models. If we liked the fit we’d rip the seams apart to see how it was constructed. Knowing your competitors’ products inside and out is highly valuable. I like to know so you can make your product different/better. Knowing your competition just so you can copy everything they do is another story. That is/was pervasive in the fashion industry and I’m sure many others.

    • http://www.feld.com bfeld

      Doing this via retail is so cool. For Fitbit, Orbotix, and the other physical products companies we are investors in sell, I’m constantly stopping into retail stores when I travel to look at their products and their competitors’ products, along with how the retailer presents them. I used to resist buying the competitors products – I felt like I was helping a competitor, and then I realized my unit purchase was trivial and I learned so much about buying it, unboxing it, and using it.

  • http://www.robbdempsey.com Robb

    Do you have any ideas on getting this type of product access with enterprise software?

    • http://www.feld.com bfeld

      See my comment above to @dmilleravid:disqus

  • ObjectMethodology.com

    Probably the only thing more important than knowing your competitors is knowing your customers!

    • http://www.feld.com bfeld

      Same thing @buffaloentrepreneur:disqus said and very very true.

  • http://www.clearactions.com Richard J Keck

    Thanks for this great reminder. I’m think this line “how hard it will be for them to change several dimensions of their products” is particularly important. It is also double-edged sword. As entrepreneurs, we first have to retain the ability to be flexible with our products; and then we have to be cautiously optimistic that the competition and large incumbents don’t have the ability or motivation to adjust and/or add to their solution.

  • http://www.asoftwarestartupguy.com/ David Miller

    … and try to find a friendly company shill if you’re in Enterprise SaaS, because you’ll not likely be able to use your competitor’s products yourself.

    • http://www.feld.com bfeld

      I’ve been surprisingly able to use almost all enterprise SaaS products regardless of the competitive dynamics. The 30 day trial, freemium, and low touch model makes this easy. It used to be hard when you had to install something on servers and deal with salespeople at the top of the funnel, but those days are mostly over.

  • http://www.betterpointment.com/ Rich Weisberger

    Yep! The blue ocean strategy works best when you best know the products of your competitors.

  • Naresh Jee

    Hoho v.Niceee Brad… but what if the product t you’re selling is VC funding to best of the breed startups… in that case you can’t get funded by your competitors to use their funds can you?
    Same with many other kinds of debt instruments and financial products. .. ain’t it ?

    • http://www.feld.com bfeld

      I don’t think VC funding is a “product.” And I don’t think I sell it. I hope that no one that I invest in ever thinks they are buying funding from me.

      • Naresh Jee

        :-)
        though if one thinks deeply enough-
        there has to be a way of tasting and comparing offerings– with the intent of continously getting better at what one does!
        Just my thoughts.

  • http://www.brandmotherknowsbest.com Buffalo Entrepreneur

    Awesome point, but not the end of the thought. The idea of using your competitors products as often as your own is so often ignored, or more likely, left to online research. And it can provide valuable information. So do it. But…and this is a point that technology companies across the board just have a hard time with…. if you focus on the product – i.e. features, use cases, technical differentiators…. you are likely to miss the true opportunity…. what the customers are really buying. And who is buying what…. the economic buyer is often deciding via a totally different set of requirements than the technical buyer…. and many times the technical buyer takes what you position as your most valuable features as table stakes… necessary to get in the short list, but not often the final determinant. It also stymies the best long term product development because you drive the roadmap from what you think customers want and need (features, speed etc) rather than what will separate you from the herd. Yes, it is likely you are asking the customers what they want, but the questions typically come from features, specs, competitive review info, so the answers are naturally skewed. Listening to your customers means dialogue and back and forth to hear the thing they mean, but aren’t saying. Unfortunately most business don’t want to invest the time and resources to do that well, and opt for systems and advice focused on a repeatable method of collecting data for statistically demonstrable answers. Which is why so many products are similar… and average.

    • http://www.feld.com bfeld

      Yup! And that was a big part of our conversation, as we were talking through the difference between an individual user and the person making the buying decision. We have been struggling with how to enable low friction purchases of our product given how it’s used. I think we have a great approach – which is very disruptive to how the existing products do it, and much more aligned with how the customer uses the product and the buyer buys the product.

  • http://SiliconANGLE.com John Furrier

    this is the epic statement “My general approach to competition is to “obsess about their products while completely ignoring the company.” -Agree many obsess over the company new hire round of funding or paid PR campaign & messaging.. wrong approach so agree fully with your statement.

    I would add my view to that great statement: “The Competitors (products/value not company) define your business ..your Customers own your business”. Many should view their customer as owners of their business.

    • http://www.feld.com bfeld

      Brilliant.

  • http://www.derekscruggs.com/ Derek

    It would be interesting to know the company and competitors in question. I understand why you may not want to disclose that right now, but perhaps revisit this in a future post.

    • http://about.me/mikeschinkel MikeSchinkel

      I was thinking the same.

    • http://www.feld.com bfeld

      I anonymized it because it wasn’t the point of the post but I’m fine talking about it. The company is Kato (www.kato.im) and the primary competitors are Slack, Hipchat, and Flowdock.

      • http://about.me/mikeschinkel MikeSchinkel

        Oh, that interests me greatly! I’ve been a heavy user of HipChat for 3+ years, but their lack of ability (or priority?) to address this issue http://help.hipchat.com/forums/138883-suggestions/suggestions/2716912-let-me-be-a-member-of-and-sign-in-to-multiple-acco and their general hands-off approach to user feedback has had me searching for an acceptable alternative.

        For a while I thought everyone was focused on Yammer-like tools and assumed HipChat’s approach wasn’t mainstream enough so I suffered in (relative) silence. But now it seems like others have discovered how useful dedicated apps with persistent chatrooms and persistent 1-to-1 chats can be and I’m renewing my hope. Thus I have tried Flowdock (too confusing), Slack (UI too busy), Hall (feature set not mature yet) and Gitter (great but tied to GitHub.)

        I will definitely check out Kato. Thanks!

  • http://www.becomenomad.com Eli

    Great post, I couldn’t agree more.
    I remember the first few months of building my business. I was obsessed about competition, trying them out, figuring what parts I liked about their tactics, and used this information to build our own products and company.
    4 years ago we started getting some clients, and since then I never took the time to take a look at what is going on in the industry, just focus on what we do. This post drives me to revisit the players in the industry again, I am sure I will find some great stuff there.

  • http://pitchxo.com/ Markus Stefanko

    There lies a great danger in this approach as well. Don’t destroy the positive aspects of your product by trying to overcompensate on features your competition has. E.g. Internet Explorer vs Firefox before Chrome suddenly came in and redefined real-estate by removing the top-bar with tabs.

  • channel_one_networks

    Exactly right.
    “My general approach to competition is to “obsess about their products while completely ignoring the company.” If you can identify competitors, use their products continually, if only to have that knowledge when the moment comes that you have the conversation about how you are going to change the game.”

    In our case we realize we compete with all the BIGGs ‘Google, Twitter, Facebook, yahoo, Warner, Comcast Fox, Youtube” and then we figure out how we can not only compete with them, cheaper, but make them want to acquire us or for us to buy them… either way works.

  • yazinsai

    > “obsess about their products while completely ignoring the company.”

    Love it! There’s always been polarizing views on this topic, and this strikes a balance that’s clear, and makes perfect sense.

  • http://www.innovationnest.co/ Piotr Wilam

    On one hand you are “obsessed about their products while completely ignoring the company.” On the other hand one should have a guess or knowledge on competition pricing, business model, product roadmap.
    Do you start with the product as the most important going deep into customer-problem-solution and then go to the second part or do you prefer to stay exploring competition’s product really well?

    • http://www.feld.com bfeld

      I view pricing, business model, and product roadmap as part of “product.”

      • http://www.innovationnest.co/ Piotr Wilam

        Thanks. It is great to read in your post that simple advise: use competitors’ products continually. What I see is that only some leaders are obsessed with competitors’ products and stay visionary at the same time. These two seems to be two abilities and only the best have both of them. There are leaders who know about their market everything and their strategies are typically more rational and incremental and others are rather visionary and making a reality check from time to time.

  • http://www.mobilepundits.com/ Krishnayan Swami

    Well, my general approach to competition is to “obsess about their products
    while completely ignoring the company. If you can identify competitors, use
    their products continually and do testing on apps and track their work activity also, if only to have that knowledge when the moment comes that you have the conversation about how you are going to change the game.

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