Thread by @spencerfry

At first glance, many new startups entering a market often appear similar to their competitors, yet that’s rarely the case as time goes by (+ why incumbents dismissing them as mere copycats are putting themselves in danger).

A thread 👇

New startups mostly build products for existing markets. The customers in that market have a certain set of needs that the founder(s) are familiar with, so they start by solving what they know needs to be solved with their own unique perspective.

Despite the end goal of the founder(s), it’s often the best route to start with a product that, on the surface, looks similar so that people in the market have an initial understanding of what you’re building and what problem you’re solving.

If you innovate just to innovate, you get @quibi:

wsj.com/articles/quibi…

A classic example of an incumbent dismissing a new entrant to the market is search engines. On the surface, when @Google launched it looked like just another @Yahoo. Of course, the founders knew it was nothing like Yahoo, but Yahoo didn’t. 😉

techcrunch.com/2016/05/22/why…

Google was far more ambitious than Yahoo, yet you couldn’t know it by looking at their initial product. To achieve their goals, the early Google would look a lot like a traditional search engine. It took years to gain the momentum to shed their cocoon and build their vision.

Meanwhile, Yahoo, and Google’s other competitors, dismissed it as “just another search engine”. This dismissal helps Google as much as it hurts Yahoo: an incumbent brushing you aside is the best thing that can happen to you because it lets you stay under their radar.

Staying under the radar bought Google the time to continue to “out-innovate” the stagnant incumbent search engine while their competitors dismissed them for being copycats.

In the blink of an eye, a new entrant is years ahead of the incumbents because the incumbents, believing they’ve won the market, are in a “growth optimization and polish” cycle, rather than what the new startup is in: an innovation cycle.

This actually all happened to me before when we started @Carbonmade. We were Yahoo in this scenario. The first online portfolio platform. Yet, we rested on our laurels and dismissed newcomers as mere copycats to what we perceived as our superior product. 😢

A few years of dismissal on our end, and we quickly found ourselves out-innovated by our competitors — mainly @Behance — who passed us in terms of (1) product quality, (2) customers, and (3) revenue. Selling for $150m to @adobe could easily have been us:

techcrunch.com/2012/12/21/ado…

Side note: It’s incredible to see Carbonmade get their mojo back in the past few years and become a powerhouse again. That took a huge commitment from their leadership and team and was spurred on by the complacency in the online portfolio market. 🙌

carbonmade.com

It’s rare that the company who builds the initial product will build the best (Google vs Yahoo, MySpace vs Facebook, Vine vs TikTok, Carbonmade vs Behance). It's easy for ego to fool you into thinking you're unstoppable, which could blind you to what’s right in front of you. 👀

If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck. Yet, this expression clearly does not apply to tech startups.

First-timer incumbent entrepreneurs will learn this lesson the hard way.

That’s why 1 of @podia’s principles is "Always looking to the future” because when given enough time, innovation wins all markets.

podia.com/about

If you find yourself as the incumbent, don’t forget to innovate. If you don’t, it will be your downfall.