As I wrap up my second year of taking a break from a traditional career, I’m meeting with some entrepreneurs who are building interesting companies. I thought it would be beneficial to answer some of the commonly asked questions that I get in a series of blog posts over the next few months. We are also hosting a Pop Up Business School in February, so the topics of starting and growing businesses are very top-of-mind for me.
Prior to starting my business, I spent five years mulling over my idea and evaluating the industry landscape. I may have had the idea early (May 1995), but by the time we began our company (June 2000), I had compiled a spreadsheet with more than 200 companies claiming to do the same thing.
What do you do when you’re not first, second, or even 200th to market? How much time do you spend worrying about those competitors?
We eventually did successfully navigate that crowded field and became the largest in our industry with over 20 million users and the first and only company in the space to go public.
How? We did it by mostly ignoring the competition. I suppose if there had only been a handful of companies doing the same thing, we would have tried to one-up them. But there were so many and in so many regions of the country that it was simply impossible to keep up.
Focus on Building the Best Team
I became comfortable early on believing that we could build the best software engineering team in our field. It seemed like many of the competitors were spending a ton of money on trade shows, advertising, and sales. Those sound like obvious places for a new company to spend money given that they need to get their brand established.
However, I kept looking at the extreme complexity of the insurance and financial industries combined with the vast variety of ways each company organized their employees and offered benefits—and it just about exploded my mind. Having spent five or six years prior to starting my company learning about relational databases and how software was built, I just couldn’t imagine how any company could solve such a complex set of variables.
It seemed like unless we spent all of our time and money focused on designing and engineering a system that could handle the complexity of our chosen issue to solve, we wouldn’t keep any of the customers we won anyway.
So our first dollars—and by virtue, our time and focus—was all spent internally.
Sure, we would see press releases of new companies launching in our space, and they would win customers and brag about it. But I would just feel sorry for them because I knew, or at least I guessed, that their system could not handle what that customer needed it to do.
Think of Early Sales as Product Research
As for sales and marketing, we added a few sales people early on and we just sent them out to drive around and see who would talk with them. If they got a meeting, I asked them to get as much information as possible on the company’s benefits programs. They would come back with these big stacks of paper forms for health insurance, dental programs, voluntary life insurance, retirement programs, and so forth. Our early sales team was essentially a product research team.
We would load that stuff up on our engineering team, and they just devoured it. We learned the business rules of how a new employee became eligible for new insurance programs, the many rules that companies used to determine how much they contributed to each benefit type, and the ways that the insurance companies required the enrollments to be sent in to be valid.
After about seven or eight years it occurred to me that we could actually give all of our software, source code and all, to any competitor and they still could never compete with us.
Now this may seem incredibly stupid or arrogant or both. However, I had spent thousands of hours staring this business problem in the face and countless meetings with hundreds of people who had spent their careers establishing this complex set of rules and I just figured out that the statistical odds of any one group of people being able to solve the problem was so low that the need to worry about someone else coming in and taking over the market was essentially non-existent.
This reinforced my earlier view that an hour spent focused on a competitor was an hour not spent improving our own system.
Using the Competitor to Your Advantage
The one place I did find a competitor to be extremely helpful was in keeping us on our toes in the sales process. The threat of someone else doing a better sales job than us was a powerful motivator that brought out the best in our preparation, presentations, messaging, and demonstrations of our products.
College football coaches are masters of developing short phrases each week to motivate their players to practice harder and stay focused for game day. Being in competitive situations can help focus you and your team. Capture that focus and encapsulate it in short phrases as they come to you. Think of your competitor as an additional motivating factor to help you and your team focus. But don’t obsess about them.
What About Feature List Comparisons?
My personal view of feature list comparisons is that they stink. They’re generally prepared by someone who doesn’t routinely use your software, let alone all the competitors’ software. Feature comparison lists are a loose amalgamation of cut-and-pasted text from a bunch of websites. So how are they relevant?
As we all need to learn to do, I had to set aside my view of feature lists and realize that they are part of the world we inhabit and therefore must be factored in to the sales process.
The main thing I did when working with our sales teams was to remind them of what I just mentioned above: that a competitor’s feature list is not necessarily reality. A sales team can become distracted by any number of perceived threats. Don’t let the feature list be one of them.
Even when our company became the largest in our industry and our annual spend on R&D, engineering, and product development was larger than the total revenue of most of our competitors, I still didn’t revert to our massive feature list when presenting to prospective customers. It’s a weak argument to compare apples and oranges and to trust that some spreadsheet is going to convince a smart person who is making a big decision.
I looked at my own decision making when evaluating new technology purchases. It seemed to me that I always placed the most emphasis, often the entire emphasis, on the quality of the people I interacted with during the sales process and their passion and knowledge for and of their products. If a team came in and really had their act together and they demonstrated their actual product and how it could help make our company better, and if those people where authentic, sincere, and capable, then I went with them. I never remember buying a single product based on a list of features.
Be Centered on You and What Your Company Offers
At some point you just have to tune out the noise of the world and remain centered on what your company offers. Your product may or may not have the longest list of features. Your price may or may not be the lowest. Your customer list may or may not contain the fanciest logos.
When you speak with the next prospect, you have to tune all of those comparisons out and simply focus on how you can help that one person. It’s you and them. Can you help them? How can you help them? How can you help them in the future?
Is your company a good company? Do you like and respect the people you work with? If so, then the prospective customer will as well.
It’s never about some other real or imaginary competitor. It’s always about you, what you provide, who you are, and what the prospective customer actually needs.
Remain calm and remain centered on that space: Who you are, what you offer, and what they need. If that aligns, then you have an opportunity to win a new customer. And if you do that enough times, you have an opportunity to be relevant in your industry. And if you become relevant in your industry, then you’ll have an opportunity to lead your industry. It all begins with remaining calm and being centered on who you are and what you offer. Authenticity is the goal; the rest will follow.