There are two ways to build a company.
You can build something incrementally better, such as a slightly better window cleaning company.
Or you can try to build something that is different different.
I have no problem with building something incrementally better, such as an IT consulting company.1 It is a great way to go about building a great life for yourself.
In fact, if you are a first-time entrepreneur it’s probably the best way to start!
However, if you are aiming for the stars. If you want to build something that lasts generations, possibly impacting the lives of millions.
Then it’s not enough to build something slightly better.
Then you have to build something truly different.
Competition is for losers
In one of my favorite episodes of The Tim Ferriss Show2 Actor and artist Terry Crews talks about how playing American football in college taught him about the destructive nature of competition.
Among the many gems in that episode, Crews states that “[…]you really can’t look at the other guy and really run an effective race”.
This is true in both sports and in business.
If you are focused on being better than your competition, you are not focused on what you can do uniquely well. All your energy goes towards besting your competition at everything they do. You start guiding your company towards becoming just another version of your competitor.
In his book Zero To One3, author and serial entrepreneur Peter Thiel even makes the argument that if you are competing, you’ve already lost.
When companies try to outdo each other, the only way to differentiate themselves becomes lowering prices, locking them in a race to the bottom.
When that happens, everyone loses.
Category of one
The best way to avoid competition is to not have any competitors.
It sounds silly. But the fact is if you are the one creating the market, then you will be the only one in it.
One way of creating a market is by inventing something completely new. But since the chance of discovering the next penicillin is close to zero (exactly zero in my case), this is probably not the best strategy.
A better way to create a market is to find a small, underserved niche, and build for that.
It’s important to understand that small niche refers to how narrowly the problem is defined. Not the size of the actual market. Many founders I see make the mistake of just looking at the TAM, starting out aiming for a market that is too big.
Trying to serve a market that is too big (and diverse!) too soon inevitably leads to scattered focus, and losing track of what your core customers really want.
Two examples of companies that started in small niches are Amazon and Facebook.
Once they had established themselves as the category leader in their respective niche they expanded into other verticals. But not before.
A third example, which is easy to overlook, is Tesla.
It might be hard to remember now, but in 2008 every mass-produced EV was boring and slow6. No real car person would even consider buying one.
The Tesla Roadster, however, was exciting!
It was a fast. It was bold! It was a proper sports car for proper car people.
Did it fit a family of four? Did it have an excellent range?
No, it didn't!
And that’s the point. It wasn't a car for everyone who needed a car. It was a car built for a very specific type of customer.
The Roadster was the starting point for Tesla. Not the end. From there they could raise more capital, and expand their line of products to the Model S and the Model 3.
For all their differences, Amazon, Facebook, and Tesla all have this in common. So when looking at them for inspiration it's important to remember that it's not their current state that is important.
It’s the steps that they took along the way.
To sum it all up, you want to build your company in a way that forces the customer to make a choice rather than a comparison7.
In a world of apples, you want to be a banana.
But it takes courage to be different.
The tall poppy gets cut and the nail that sticks out gets hammered.
However, once you find your niche and stop competing, being different goes from being what you are laughed at for to being what you are praised for.
My first real company was an IT consulting firm called Devies that I co-founded back in 2016. It was a great cash-flowing business that set me up for everything I've done since I sold my shares in 2020. ↩
First said by Mike Maples Jr. I highly recommend watching this part of My First Million to hear Mike elaborate on forcing a choice, Thunder Lizards, and other fun topics! https://youtu.be/ZdzDf9HFvFw?t=2961 ↩
After over a decade of building apps, teams and companies, I've now started coaching founders and CTOs through something that I call Nyblom-as-a-Service.
If this is something that would be interesting to you feel free to schedule a free discovery call to see if we are a good match for each other.