What to do if you are a bootstrapped entrepreneur and a well-funded startup copies your product or enters your space
I know the feeling. You catch your first glimpse of the Medium article, PR release, or email notification that tells you a well-funded startup has launched and is now a direct competitor to your indie startup. Their branding is on point, their product looks polished, they have millions in the bank, and they’re featured on Product Hunt. F**k.
It’s almost like going through the 5 stages of grief in hyperspeed. In your mind, your company has already gone bankrupt, sold, or just flamed out multiple different ways in nano-seconds. Will it take days? Months? a Year?
This happened to me when I poured my savings to create a social audio sharing application and Anchor.fm launched & raised millions of dollars.
This has happened at least twice since launching Wavve in late 2016.
It will probably happen a few times with Zubtitle too.
But alas, I’m still here. It doesn’t seem like you survive, but you can.
I know your hope levels are currently at an all-time low but I am here to tell you: This is a good thing.
Why Competition With a Well-Funded Startup Is a Good Thing
Congratulations! It’s official. You picked a great market for your company to operate in. You can be sure of this because this cash-strapped incumbent just walked in. But here is the even better news:
Once a Startup accepts an outside investment, they are married to the expectations of 10x. You are an Indie Startup. You aren’t married to these expectations or returns. If they can survive in this market, then there will be plenty to go around. Who knows, the market may not support a company of their size but yours may be just fine.
There are a lot of other reasons competition is a good thing (Google it if needed) but it all boils down to this: It forces you to get to work.
So let’s get to work.
Take a Deep Breathe and Say These Words
Take a breath. Chill for a second. Woosah.
Now say these words out loud: “We can beat them.”
(By beat them I mean you can build a business that can thrive either alongside or beyond their existence.)
You need to believe these words and be willing to put in the work to make it happen. If you don’t believe you can beat them, there is no harm in throwing in the towel. Just go ahead and do it now.
Still reading? Next up: If you don’t have a natural competitive fire, you need to find one.
I found that I don’t have much of a natural competitive drive. Generally, I want everyone to do well and I never had a problem giving up what I had for someone else. But if I took that approach in business, I would lose everything I have built, my business, my revenue, my creative outlet, etc., I needed to take a stand and put up a fight.
Find Your Niche(s) or Get Stitches
This is your greatest weapon against a VC backed behemoth. Thanks to their multi-million dollar funding round & hiring spree, they have to focus on the whole market. They are also now married to 10x results or bust.
It’s all or nothing for them. But not for you.
They can’t take the risk of niching down to a small segment of the market (they should but won’t). You can.
Take whoever you consider to be your target market and attempt to break it down into 3 or more segments. Quickly test those segments with marketing strategies and determine which one brings in the best results.
For example, if you offer a time-tracking tool for freelancers, write down as many different types of freelancers as you can pick the top 3 that seem like the best target marketing (i.e., Designers, Developers, Virtual Assistants, etc.,).
Us Indie Entrepreneurs generally don’t have the war chest to launch a full scale assault on a new competitor. Luckily for us, we don’t have to crush our competitors. We just need to differentiate from them enough to attract customers that can help fund our operations.
There are plenty of ways to differentiate: Pricing, feature sets, by distribution, UI/UX, marketing, messaging, etc., Focus on finding one that can set you apart.
Once you have found your niche, make adjustments to improve on your product market fit.
Be Where They Can’t Be
Large, recently-funded startups generally focus on expensive marketing campaigns that hit a broad audience. They have to move fast and capitalize on their recent raise. This always leaves the nooks-and-crannies unexplored & unused. Try and be in every one of them.
Need some ideas on how to target niche audiences? Try some of the tactics below:
- SEO is a long-tail game. It’s like planting a tree… Funded Startups can’t always afford to wait for a tree to grow. They need results before that next funding round.
- Build a community – This is another long-tail approach that takes work and consistency, but can pay large dividends down the road.
- Targeted direct outreach – Don’t be scared to pick up the phone or email a cold prospect!
- Make Great Content – Learn as much as you can about your audience and write content that will help them be better at their job.
If you only do one thing in response to your new competition, make sure you focus. Don’t respond by launching 4 new initiatives in hopes that one of them will stick. Take stock of what your product & team does really well, compare that to your competition, and position yourself to the market in a way that makes you different.
And don’t quit!