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Startups Get Addicted to Competition

27 Nov

Last week, I was listening to an interview of Internet legend Peter Thiel about his new entrepreneurship course at Stanford University. Among the many interesting arguments cited in the interview, there was one related to the true value of competition in a capitalist society that particularly caught my attention. In his thesis, Peter challenges some of the common dogmas of the progressive nature of a competitive ecosystem can be really good for society in general is not necessarily great for the entities invested in the competition.

After listening to the interview, I started reflecting upon that argument trying to apply it argument to the startup ecosystem. In my opinion, more often than not, the startup ecosystem mistake good competitors with value creators and, consequently we tend to obsess with master the art of competing instead of seeking to provide true value.

While competition is inevitable if you are operating in a relevant and sufficiently big market, those markets also offer enough opportunities for companies to provide value in different areas that don’t necessarily collide with each other. As a startup, is almost impossible to ignore competition. We are constantly reading news, blog posts about how great our competitors are doing and we obsessed used that as a driving force to be better. We take pride about beating our competitors because is a clear testimony that our efforts are being recognized. In the middle of those competitive dynamics, companies become addicted to competition and have a hard time operating without it.

Being a good competitor is an important quality of a startup but it does not directly translate into providing value. Instead of being addicted to competition, we should spend more time thinking about what segments of the markets we can use to create little monopolies. Whereas aggressive competition will benefits the consumers of our products and technologies, finding those monopolies will directly benefit our companies.

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Posted by on November 27, 2012 in Uncategorized

 

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