How to Think About Competition

I used to live on 15th and 3rd in NYC. These were the days before one kid or two kids or even Miss Rubes, so on Sunday’s I used to wake up whenever I woke up and amble on over to David’s Bagels on 16th and 2nd and get myself a bacon, egg and cheese on a toasted everything bagel and a coffee. Sometimes two coffees, because why not. That’s how life on 15th street was.

To get to David’s I’d walk right by Bagel Boss, which was two doors down. I was always curious about how these two co-existed, so, one particularly slow Sunday I noticed the owner of David’s sitting in the back of the shop with a stack of papers in front of him. I went for it.

“Hey, do you own this place?”

“I do,” he said.

“Awesome…. David?”

“No.”

“Uhh…ok.”

We talked for a few minutes about how busy he was or wasn’t on sunny or rainy days before I moved on to what I’d walked over for:

“What do you think about Bagel Boss? Is there a rivalry? Is it a Montagues and the Capulets sort of thing?”

I regretted The Montagues thing the second I said it and it was clear it was lost on not David, but he ignored it.

“Bagel Boss is the best thing that’s ever happened to us. Because now people have to make a decision, and if you make a decision that means you have to care. You’re forced to. Plus, we fit well together. Bagel Boss is Kosher, so they won’t serve a bacon, egg and cheese, like we do. But they focus more on baked goods - you can get turnovers or a black and white cookie over there, where we just do bagels. So now, we’re sort of known as the ‘bagel block,’ and when you come here you choose one or the other based on whether you want a BEC or a pastry.”

He looked back at his paper, but I had one more question.

“How do you know having Bagel Boss next door makes people care more about your shop?”

“Because they tell me. We were here before Bagel Boss, and sure people used to come in and we had some regulars, but nothing like now. And, no one ever said they loved our shop or our bagels. Now, people say all the time - ‘we love your bagels, they’re so much better than Bagel Boss,’ or, ‘we’re David’s over Bagel Boss - I can’t believe people go to Bagel Boss.’ And it turns out, most of those people just like a bacon, egg and cheese. That’s it.”

It’s natural to be spooked by competition, especially early on when they’ve almost certainly got more resources than you. And, I’m sure you’ve been told to think of competition as “validation that a market exists,” and that’s fine. But it doesn’t really help you make a plan for that competition.

David’s and Bagel Boss does.

David’s makes a solid bacon, egg and cheese that is made 100x better because Bagel Boss cannot make a bacon, egg and cheese.

Your product will be viewed through the lens of alternatives. You don’t need your product to be objectively great, it just needs to do something the competition doesn’t do. And, ideally - like in the case of Bagel Boss - can’t do.

So, when you’re getting spooked by competition, start by recognizing the work they’ve done for you by existing. The better known they are, the stronger your marketing against them can be -

“You know Bagel Boss has great bagels, but you want a bacon, egg and cheese.”

“You’d love to use X competitor, but you can’t because you’ve got Y constraint. We built a product specifically for you.”

What do your competitors not do?

Which customers feel a disproportionate amount of pain / miss out on disproportionate upside because that capability doesn’t exist?