Comparing Competitor Functionality

Most startups have an arch enemy and only a handful of other serious competitors. While markets might seem crowded from the outside, on the inside there are usually just a handful of companies that compete on a regular basis. One caution with an arch enemy is to not get caught up in the functionality arms-race. That is, don’t blindly copy new competitor functionality just because they’re boasting about it.

Here are a few thoughts on competitor functionality:

• Competitors might be positioning themselves for a move in a different direction (e.g. to a different vertical, up market, etc), so analyze the potential motives
• 5-10% of functionality added by a competitor will actually not be useful (e.g. they’ll make a big splash about the new functionality but customers won’t actually use it for a variety of reasons)
• Listen to customers, especially ones that best represent the ideal customer, and deliver new functionality that meets their needs, not the needs of competitors’ customers

Playing the functionality game with major competitors is standard course for entrepreneurs. Resist the temptation and focus on adding value to the right customers.

What else? What are some other thoughts on comparing competitor functionality?