Competitor Analysis
When you build in a "hot" space, you usually end up in a crowded market. And that can make things "interesting"
My discussions regarding the usage of dashboards are going well. Once I finish my current round (by this weekend), I’ll synthesise some of my insights and post them here. However, there is still a bias in my sample - I’ve mostly spoken to people in Indian companies and large multinationals. A missing piece is smaller “local” companies outside India (including startups). So if you work for one such company, and are happy to talk about your company’s usage of dashboards, I’d be grateful.
Now, on to the show. Some of you might know that I’m building something broadly in business intelligence. The product as I’ve envisaged it so far incorporates “classic data science”, classic AI, information theory, visualisations and generative AI (among other things), all to deliver an analytics product. Given the complexity of the problem I’m looking to address, I wouldn’t be wrong in calling this “deep tech” as well.
That said, for all of this year “GenAI” has been a hot topic. And one of the usually demonstrated use cases of GenAI is in data analysis. Consequently, there seem to be several others building in approximately the same space that I’m looking to build in.
[N]ot a day goes by without a friend or former colleague sending me the link of some company that purportedly operates in the area that I want to operate in. And looking at these companies is like reading the Astrology column - you tend to focus more on the commonalities and ignore the differences.
One of the side effects of building in a “hot” sector is that you are not alone. A better way of putting it is that you are operating in a rather crowded space. Because the field is “hot”, everyone wants to build in it. And this can both be a good thing and a bad thing.
The Ups
The good thing is that there is some sort of "validation”. That so many others are building in a similar space indicates that there is something to this market. Success, of course, is not guaranteed, but that others are building around where you are lets you know that you are not going to be horribly wrong in terms of what you are looking to do.
The other good thing (okay this is pure speculation here - I’m yet to start speaking to any potential investors) is that if you are building in a sort of crowded space, there will be enough people who will have a “thesis” in the sector, which you can then hope to ride on. For example, when I started consulting in 2012, my sales became significantly easier after the phrase “data science” became a thing. Suddenly, I needed fewer words to describe to potential clients how I could help them.
Again I’m nowhere near validating this but - if you are in a sort of crowded space, it also makes it relatively easy for you to sell. Your potential customers approximately know what to expect from you, and the amount of effort required to educate them on the product will be lower (ceteris paribus).
The Downs
The downside, of course, is massively increased competition. Given that you are building in a massively crowded field, the number of “applicants” is far higher than the number of “seats”. This inevitably means that a lot of the builders in this field are not going to “make it” (to sustainability or exit).
(Also, what kind of business you are in matters. If you are in a winner-take-all business (a platform, or anything with network effects), things can be brutal (or “highly power law”). Other industries are kinder in allowing for sustainable fragmentation. In that case, things may not be as bad)
And this is where all the talk about “execution” matters. If what you are building is adjacent to / overlapping what other people are building, the product that is more likely to be adopted is the one that is better executed. So the pressure to nail down the execution (including product, UX, etc.) is so much higher.
Related to this, you need something to stand out, and thus some idiosyncrasy. The moment people start seeing you as “yet another ______ “, you have effectively lost the game. You need a solid differentiator in your product. And this is where things get complicated - the more solid your differentiator, the lesser is your sales / fund raising advantage of going along with the crowd.
Then, there is this sense of urgency which hits, which can be both good and a bad thing. Because so many others are building similar things to you, you want to get your product out in the market asap. This can help defeat inertia, but can also lead you to rushing things and delivering something suboptimal, which cannot be good for long-term success and sustainability.
Yet another issue is that people can frequently misunderstand you, and fit you into a pre-existing template. I’m, for example, looking to automate insights from data. There is this old friend who, after listening to my initial pitch, has decided that I’m “building an analyst copilot”. Having gone into that bucket in his head, I’m finding it really hard to get out (he keeps sending me links about copilots). With a friend, this matters less. With potential investors or customers, this can be a problem.
Cookie Licking
This is among the most studmax concepts I’ve come across in recent times. Steven Sinofsky wrote about this (OK this post was free when I first read and linked to it from my personal blog, but now seems to have gone behind a paywall) in his Substack book Hardcore Software:
Microsoft developed a vocabulary that to this day dominates discussions between alumni. Cookie licking is when one group would lay claim to innovate in an area by simply pre-emptively announcing (via slides in some deck at some meeting) ownership of an initiative.
When you are operating in a crowded space, it is easy to get intimidated by someone “licking a cookie”. You think you have a great idea and when you see that in some other company’s blog or LinkedIn or website, you get thrown off that it is not that original at all. And when someone describes an idea in a way that you could have described it, it is natural to feel threatened.
For example, earlier this week, I found that one of the established players in the space I’m looking to target is already offering one of the things I’m planning to offer. This made me jittery for a few hours, and it took an insane amount of effort to calm down (the next morning I was calm, and continued to build).
In fact not a day goes by without a friend or former colleague sending me the link of some company that purportedly operates in the area that I want to operate in. And looking at these companies is like reading the Astrology column - you tend to focus more on the commonalities and ignore the differences. You overplay the commonalities and underplay the differences. You think they are building exactly what you want to build, and are going to kill you.
Again I’m speculating, but I guess this is part of what makes life as a founder hard. You have something that is not yet there, which you are comparing to someone else’s PR. I guess it is natural to occasionally feel that there exists just no point in building what you are trying to build, and wondering if you should be building something else.
I’m starting to believe I’m just about starting to hit immunity when it comes to hearing about other companies operating in the same or similar space where I intend to operate in. I guess the only way to reinforce this is to double down on the idiosyncrasies? Any other suggestions?
I assume many of you have been here at this stage of company formation already, many years in advance of me. Is my thinking on this appropriate? How did you approach building in a crowded space? And how was the funding / business development process? Anything in particular that I need to look out for?
Nicely said. TBH, I think 99% of the stuff out there is bullshit. Funnily, I was just having the same conversation with a friend yesterday. There are so many parallels with how "Analytics" became a thing. First, there was dismissal, claiming it was a fad. Then there was FOMO, where everyone wanted to throw some money at it just so they wouldn't be left behind. Then eventually there was this realization that there's no silver bullet, and people started putting realistic expectations of business performance lift from analytics. Right now, I believe Gen AI is in that same FOMO phase. So people will try anything. But achieving Product Market Fit and finding a way to measure and deliver ROI are a whole other ballgame
Hi Karthik, all the best for your business venture. Have been a long time follower of your thoughtware. I previously built and exited a semi-successful startup in the analytics space - so would love to share some experience with you. I hope you succeed! What is the best way to reach you - can you kindly share an email which I can communicate with? Thanks