David Cummings on Startups

Crowded Markets Aren’t Actually Crowded

Written by

David Cummings

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When you look around the Atlanta Tech Village, or any other group of startups, you’ll find that the startup ideas aren’t as revolutionary as you might expect. In fact, most of the ideas already have tons of competitors. So, why are the entrepreneurs playing the me-too game and battling it out in crowded markets?

Markets aren’t what they appear on the outside. On the outside, it looks like there are 10 different competitors all doing the same thing, speaking the same language, and targeting the same group of businesses. In reality, each competitor has their own strengths and weaknesses and targets a slightly different segment of the market.

During the marketing automation wars of 2011 and 2012, it looked like Pardot competed with Marketo, Eloqua, Act-On, and many more. A material percentage of Pardot’s deals weren’t competitive at all (meaning, a new customer would sign up without evaluating other products) and when there was competition, it was almost always with the same competitor. Inside the market was very different than what the outside saw.

While markets are considered crowded in that there are a number of competitors, most markets aren’t winner-take-all or winner-take-most, resulting in a number of “winners” that carve out their respective niches and build successful companies. Crowded markets aren’t actually crowded when you get on the inside.

What else? What are some other thoughts on the idea that markets that look crowded can actually have a number of successful businesses?

Comments

5 responses to “Crowded Markets Aren’t Actually Crowded”

  1. Daryl Avatar
    Daryl

    I think in general today, many startups are rarely revolutionary. Instead, it’s all about marketing and execution. Even in more “mature” markets like consulting or accounting firms, the pie is big enough that you can grab a slice and grow.

    When looking at technology today, innovations are somewhat few and far between especially given the barriers for entry (and exit). For my point-of-view, it’s all about the user experience and building the community that you can then leverage the momentum to keep growing. Looking at some major players today whether that be in the CRM space or even more B2C companies with the large exits, they make their products incredibly easy to use and then build on the momentum to grow the community. From there, social (peer) pressure takes over and incites more growth.

    It’s all a big marketing game now as technology churns so quickly. Oh, and the large platforms are the real winners as businesses become more niche-y and introduce plug-and-play features vis-a-vis APIs.

    Reply
  2. rhdavies Avatar
    rhdavies

    David,
    Firstly, I would like to mention I have read a dozen or so of your posts, and I would like like to thank you for the insight, writing and “common sense”. Secondly, with respect to the above post, the dynamic nature of competitive ecosystems and value chains/value fabrics coupled with essentially differing strategies and management execution capabilities, give rise (IMHO) to the essence of your final sentence in you penultimate paragraph above. I am not quibbling with Daryl’s reply at all; I am asserting that Uncle Warren’s notion of a “moat” as a requirement for value creation in the innovative SME domain may be less important. Thanks again.
    RHD

    Reply
  3. John R Naugle Avatar
    John R Naugle

    David, may I have the honor of sending you a proposal? Please relay your contact email to me here: ATLpeace@gmail.com Also, you may have some entrepreneurs who would be interested in this:
    http://www.kauffman.org/newsroom/2014/07/now-is-the-time-to-get-in-the-ring-pitch-competition-application-opens-for-us-entrepreneurs

    Reply
  4. Dave Williams Avatar
    Dave Williams

    Find a niche in a proven growth market, be the best and then you can always broaden your focus once you have out-maneuvered the competition. Being the best in a niche affords you the ability to compete against larger players, charge a premium, and bring on board experienced professionals from the industry with specific niche industry focus. Proven growth markets with opportunity niche segments are the way to riches not me too products and services. Do your research, understand the companies, identify the niches and have fun beating up and out maneuvering the competition!

    Reply
    1. John R Naugle Avatar
      John R Naugle

      David, I agree with your point: “Markets aren’t what they appear on the outside.” It is sad that naysaying simpletons can often times default to stereotypes when defining markets. However deep thinkers, like you, can courageosuly call us to look beyond, and to envision the possibilities of markets where the majority can see little.

      For example, our organization joins with over 1000 other peace organizations worldwide to cultivate the peace market. All too often, groups like ours are unfairly stereotypyed into being simply anti-war. This 360 year-old quote by Spinoza more accurately defines the word:

      “Peace is not an absence of war;
      it is a virtue, state of mind,
      disposition for benevolence,
      confidence (courage) and justice.”

      At present, we’re looking for courageous leaders who have the genuine interest and the needed spiritual capital it would require to lead our organization into the mission success of helping the birthplace of Dr. King (where he authored “I HAVE A DREAM”) to become formalized into a global capital of peace. Atlanta is the best positioned city on Earth to eventually inspire our entire global family and propel Tourism: The World’s Biggest Peace Industry in these early years of the Peace Millennium (Years 2000-3000).

      Like you, Dr. Peter H. Diamandis is also a proven visionary leader that we would benefit from engaging. As our organization would enjoy having either of your commitments to assist us, I also feel certain that you would each derive benefit from meeting one other. On that note, I wanted to recommend that you seriously consider joining his Abundance-360 mastermind group:

      http://abundance360summit.com/

      Peter is close to releasing his “BOLD” book. Peace may be an important virtue to cultivate, but courage/boldness is THE most important.

      David, thanks for your inspiration and example.
      Please email me here: ATLpeace@gmail.com
      Proposed Subject Heading: Atlanta’s BOLD Destiny

      In memory of Don Quixote…
      “Onward and forward”
      John

      PS
      My apologies and feel free to delete this comment if you’re uncomfortable with this public invitation to connect (I’m non-tech and thought this would be an expedient way to reach you).

      PSS

      “Fortune favors the brave.”
      — Virgil (70 BC – 19 BC)

      “Whatever you can do or dream you can, begin it.
      Boldness has genius, power and magic in it.”
      — Johann Wolfgang von Goethe (1749 – 1832)

      “Don’t think, just do.
      Begin, be bold and
      venture to be wise.
      Carpe diem!”
      — Horace (65 BC – 8 BC)

      “Courage is not simply
      one of the virtues.
      Courage is the form
      of every virtue
      at its testing point.”
      — CS Lewis

      Reply

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