4 Things You Should Never Do When Dealing With Competitors

Here are four smart ways to handle competition while building your business.

(This article was initially featured on Entrepreneur.com on October 10, 2022)

The subject of competition can be a very polarizing thing. Many of the world’s most successful professionals proclaim they’re obsessively competitive, almost to a fault.

The reality is that if you’re starting a business and you plan to have your business grow, you’ll eventually run into someone that had or has a very similar idea to the one that you can’t stop thinking about. In fact, there are probably twenty different articles on the subject of competition that are competing for clicks with this very article! (Although this one is the best)

So as entrepreneurs, how should we be thinking about our competitive landscape?

These are a few of the observations I made as I wrestled with our competitors in the process of building my company.

Don’t ignore it

When starting something new, it’s important to do a complete market scan to understand what and who you’re up against. Size your market and list out your direct competitors, frenemies, as well as firms that are one or two moves away from becoming direct competitors. Figure out how much they’ve raised, the depth and breadth of their product offering, and the experience of their founders and team. Use tools like Google Trends to understand key terms that are popular and commonly searched in your category to help inform your positioning relative to your competitors. 

If you’re unable to find at least three competitors in your space, that’s usually a pretty bad sign. It’s rare to be the first and only product to market. In most cases, entrepreneurs that claim to be “the only product” in the market are still searching for an actual market and problem to solve. Unless you have a unique insight with real customer traction inside of a category you’re creating, it’s usually easier to innovate and disrupt incumbents in an established category with a known problem and a defined buyer profile.

Share more

Oftentimes, entrepreneurs are hesitant to share any information publicly about their business or the product you’re building.

In reality, your incumbents, particularly large established vendors, could care less about what you’re building. You could literally call the lead product manager working on a product in your space and share your business with them. There’s a very low likelihood that they do anything with the information you share with them. 

Big companies have established roadmaps that are difficult to adjust. Even if one of your established competitors wanted to compete with you, it would require them shifting resources off of their current priorities to do so. We went as far as publishing our roadmap publicly for customers and prospective partners to see when and how we were prioritizing things. That actually became an opportunity and moment for us to flex our position and our focus.

When we built our company, one of our direct competitors immediately signed up for one of our free trials. They even took a prospective “partnership” call to get intel and information about our business. Two years later, that same company came back to us and offered to acquire us for a generous multiple of our revenues. In short, it could work to your benefit to share MORE with your competitors. Established competitors may realize how far behind they are in your category and make you an acquisition offer to accelerate their roadmap or build out their team.

Don’t be an a-hole.

As markets heat up, competition can become fierce, particularly if there’s a limited window or land grab opportunity to establish yourself as a category leader. In the heat of battle, it can be tempting to start trash talking your competitors when in a shared sales cycle. Don’t do it.

It’s OK to highlight the differences between your product and your competitor’s product, but do so in a way that elevates both positions while allowing you to reinforce your advantage. For example, if you’re selling to an enterprise customer segment and speaking with a SMB customer, there’s no harm in referring that prospect to a competitor that is focused on selling down market.

Not only are you signaling that you genuinely care about the product fit for that customer, but you’re also demonstrating that you don’t NEED their business. Confidence is cool.  When you elect to throw stones at competitors, it suggests you’re overcompensating for something.Prospects can smell desperation from a mile away, and that smell can carry over to future selling opportunities if you let it. 

Most importantly, don’t disparage your competitors in written form. I’ve had multiple prospects forward me emails from my competitor’s founders/CEOs with all of the apparent flaws in our product and business. Not only was this great bulletin board material that motivated our sales and product teams, but it also helped us uncover a new market opportunity which we hadn’t considered that our competitor was beginning to sell successfully.

We were second to market with this product; However, we executed better and ultimately won the category thanks to the insight from our largest competitor.

Don’t let it consume you

Competition can be addictive. The highs and lows of success and defeat are what make the game of entrepreneurship fun. It can also be incredibly humbling, particularly when we’re on the losing end of a competitive sales scenario. I’m not suggesting that our marketing teams put down their battle cards or that we stop arming our sales teams with the resources they need to set “landmines” for competitive sales scenarios.

However, your competitors are one data point that can help inform your understanding of the market you’re operating in. Use competition as an accelerant to your own learning and self improvement. There can, and will, be multiple winners in a category. This is validation that your category is growing, which in turn drives more attention to the space you’re building in. Don’t run from it. Embrace it.

Justin Vandehey

Entrepreneur & Podcaster

Justin Vandehey leads partnerships and business development for Culture Amp, the industry leader in employee engagement solutions. Culture Amp acquired the company he cofounded, Disco, which Justin grew from $0 to seven figures in ARR (and profitable).