David Cummings on Startups

Rolling into a Crowded Market

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David Cummings

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Recently I was talking to an entrepreneur who was launching a new product and wanted to talk through a few ideas. As we drilled into his product it was clear that there were a number of well-funded competitors already in the market. When I mentioned this, he didn’t seem phased and said that they are “rolling into a crowded market.”

Here are a few thoughts on rolling into a crowded market:

  • If it’s a market that’s saturated with legacy technology, the new technology needs to be 10x better (not just twice as good) to get people excited about changing
  • If it’s a green field market (customers are buying this technology for the first time), the solution needs to be compelling enough to get them to try it out (the number one enemy is no decision or no action — the status quo)
  • The go to market strategy needs to be strong enough to beat the competition, assuming a solid product (better marketing, stronger sales team, differentiated partner program, etc)
  • Sufficient resources need to be in place (or low burn) to spend enough time figuring out the market dynamics and a strategy to win
  • Pick out a niche that’s winnable yet relevant enough whereby the product can be expanded to a larger market

Startups roll into crowded markets all the time. With a solid product and strategy, crowded markets are still readily won.

What else? What are some more thoughts on rolling into a crowded market?

Comments

3 responses to “Rolling into a Crowded Market”

  1. Dave Williams Avatar
    Dave Williams

    No one would have ever imagined the search industry being dethroned by a hot startup called Google back in early 2000s or the social space being won by a hot Boston startup called Facebook. Google reinvented search through their link algorithm versus the traditional content indexing approach. And, Facebook reinvented social through their “like” social algorithm. Many times early entrants set the foundation and late entries can win through innovation, focus and differentiation and a bit of luck! Google was the default search engine for yahoo searches that werent found in their directory and through this built traffic and a brand, and ultimately dethroned yahoo and others Altavista, etc as they lost focus and became portals to the web and lost focus on their core product. Facebook did the same to MySpace, Friendster and others as they lost focus and lacked true technology innovation that reinvented an industry but instead set it up to be taken over. It is a David vs Goliath winner takes all scenario so never doubt the opportunity for the underdog as industry leadership is never fully owned in new, emerging and fast growth segments. Plus, it is easy for the big players to lose focus and their innovation edge as they get frothy with wealth, bureaucracy and frictionless talent losses, especially in California’s Silicon Valley companies as the lineage of talent is like charting a family tree.

    Reply
    1. Michel H. Avatar
      Michel H.

      What happens when the underdog “David” grows to the complexity and size of the Goliath enterprises that they overtook in the marketplace? During the energizing growth spurt, were the original underdogs taking notes to avoid the similar fate of the former Goliaths?

      Reply
  2. Edmund Amoye Avatar
    Edmund Amoye

    I beleive niche strategies are especially important when rolling into a crowded market with incumbent legacy systems. Google focused on being a seraph engine when it’s competiton were focused on being portals. In order to do something 10X better than the large incumbents it’s better to focus on one thing you can do exceptionally well. It’s builds trust and followership. Ever considered buying a TV-DVD combo? Fusions and combos hardly ever live up to expectations.

    Reply

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