Tuesday, February 6, 2007

How to Compete as an Entrepreneur

If you're anything like me, you experience a sense of excitement, an "anything is possible" euphoria when you read essays written by the likes of Paul Graham. Paradoxically, you may also feel a nagging sense of futility or hopelessness when you realize that when Paul Graham talks about succesful entrepreneurs, he's talking about the incredibly smart people who solve really tough problems.

Like me, you may also come to the conclusion that he's talking about the top 2%. Chances are good he doesn't have people like you or me in mind.

So, if you and I aren't in that top 2%, then does that mean we can't compete? Does it mean we aren't viable as entrepreneurs? Are we destined to fumble around and screw things up until we maybe, just maybe get lucky? I don't think so, and I hope this post provides you with the same sense of "anything is possible" attitude.

If you don't have the brain power that enables you to write compilers on the weekend, how can you possibly compete with people who do?

The first step is to figure out (in VERY broad terms) what kind of advantage you have.


  • You are really, really smart (i.e. in the top 2%) Your advantage lies in your ability to do things that the other 98% can't. You can write software that solves terribly complex business problems. An example might be a company like Google.

  • You have imagination, intuition, and clever creativity. Your advantage lies in your ability to put things together in new ways. You often look at mundane, or simple problems and see elegant, obvious solutions. An example might be the guy who put together www.chicagocrime.org - one of the first google maps mashups.

  • You are agile. You can put together projects and ideas very quickly. Your advantage lies in your speed, in your ability to rapidly improve an existing idea. You can quickly take someone else's product and reproduce it. Rather than try to get in front of the next wave you simply ride along, reproducing products that have proven to be succesful. An example would be a company like Microsoft.


I think these traits are listed in order of most desirable to least desirable. As I hope this post explains, being lower down on the list doesn't mean that you can't be as successful as someone who's got a more desirable trait, it means that you have to be that much better at exploiting YOUR abilites than the person is at his or hers.

In short, it's about playing to your strengths and not your weaknesses because the next step is to figure out what kind of advantage your opponent has.

Here's what I mean:


  • If you aren't a brainiac but are creative then you should spend your time and energy making sure that you are using your imagination to it's fullest. Is there something that your competition is doing that you can beat by simply being more creative? In their quest to solve a really hard problem did they miss something that you can take advantage of? Now that they've solved the problem, is there a better way to work with the concept? Can you give people a better UI?

  • If you aren't that smart and aren't that creative, then you need to make sure you are moving faster than the other person. Let him or her figure out the hard stuff, and then follow them right on their tails. Wear them down, burn them out by forcing them to move more quickly (which, remember, they aren't good at).

  • If you aren't smart, and aren't creative and aren't fast then I have a solution for you: find someone who is and do whatever they tell you to do.


The killer combination would having all three traits. I'm thinking of companies like Google. When you think about Google in terms of their smarts, their speed of development and their creativity, you can see why they make a formidable opponent.

Pick one of these angles and get really good at it. You can always win by playing to your strengths while exploiting your competitor's weaknesses. The trick is to know what your strength is and what their weakness is. I hope this post has provided a reference which helps you know what those are.

I would love to hear feedback about this analysis. Do you think this is a practical way of looking at competition? Am I way off base? What do you think?


Thanks for reading!

3 comments:

Noah Winecoff said...

Interesting post...good stuff.

Jyot said...

Excellent write up. Thanks !!

Anand said...

Interesting post...but i somehow feel point 2 and 3 is more important that point 1. I say this because if you are extremely brainy, then you are going to find it hard to relate to the remaining 98% who are going to use your product. You may end up creating products that are super smart and intelligent, but these products are likely to cater only to the limited few who are super smart and intelligent like you. May be i say this because I am not clearly the smart one :), nevertheless just a thought...