How YC Companies Beat Amazon and Google
Source: https://www.youtube.com/watch?v=tzsmJtKZ2No
Fear of Failure and Lies Founders Tell Themselves
Founders quickly learn that they’re not the only one having the idea and it’s easy to start thinking that you have to compete with the other companies that have your idea and you have to beat them in order to succeed with your own company.
You start thinking things like:
- They’re gonna steal my customers, so I have to steal their customers
- Their product roadmap must be amazing, so I should copy whatever they do without thinking about it too much
This mindset is dangerous and can take you away from thinking about your own customers and having a First Principles approach to building your company.
Most Common Outcomes
First, everyone’s gonna die. The most common outcome is that neither you nor your competitors are gonna make something that people want. Second, there are lots of businesses where there are multiple winners. Eg. How many banks are there?
Run with the fear till the end point to see what you’re really afraid of and when we really open the closet, the boogeyman isn’t really there.
Perception vs Reality
The Boogeyman is not there. Often times, your competitors are as messed up as you are.
When you’re running a startup, you’re constantly feeling like you’re failing. You see everyone else’s exterior and marketing and you feel like they’re doing great. But, as a YC partner, you realize that all of them are really badly flawed somehow. There’s truth to saying that you want to get more customers than your competitors, but at YC, we see that founders are quick to assume that their competitors are going to win, looking at their fundraising, hiring, etc. but you need to look at things like “Are your customers talking about them?”, “Are you losing deals?”, “Have you looked at their product?”, “How do you rank up?”, etc.
Copycats: Twitch
At Twitch, our competitors and us were inherently copying each others’ features by looking into the websites, but the company only started working when Emmett and Kevin actually started talking to the users and figuring out what they wanted.
Back to Basics
Get back to basics like “What’s your growth rate?”, “Customer churn?”, “Sales pipeline?”, etc. If you can answer those questions well, just keep going.
Spend time on things that you have control over, not the stuff that you don’t.
Real Competitive Concerns
“We don’t have competitors” is a red flag. That shows a lack of understanding of the customer and what the customer is doing right now to solve the problem.
“Good Enough” Example - Microsoft Teams and Slack
Structural advantage with a crap product doesn’t win eg. Microsoft Music Player, Microsoft’s Mobile OS.
But, structural advantage with a “good enough” product can win. Microsoft copied Slack, but just as often, they don’t nail it.
FAANG Fails
FAANG companies more often than not, do not kill startups.
Snap still lives even after Facebook has been hacking away at it.
Just build a better product and all these other advantages are just moot points.
It’s really rare for a company that has the structural advantage to also put out a great product. It’s not the ideal allocation of resources, because they don’t have to make the product great for it to succeed.
Instacart vs Amazon
Picking the right Avocado seemed to be too big of a challenge for Amazon!
Build a Better Product
Often times, we have to give this somewhat depressing advice to founders: “This is a hard problem, but not a complicated product. You need a better product. It’s really hard to build a better product, but it turns out that you get such an advantage by delivering more value to your end users than everyone else does. It’s the club you can bludgeon everyone else with.”
Stay informed of your competitors, but don’t let that deflate you.