I’ve observed that a founder’s respect for the competition follows a consistent cycle.
In the early days, say sub $2M in revenue and 20 employees, the founder’s business is usually a point solution (with a big vision of course!) that is competing with other point solutions that have been around longer. The founder has zero respect for the competition. Borderline contempt.
In talking about the competition you hear the founder say things like “their product is broken, we are stealing customers from them, I heard their founder is an ass, I heard they raised a huge funding round that they aren’t living up to, they recently laid off people, etc…”
As the founder’s business finds success and starts scaling, say growing from $2M – $10M in revenue and 20-100 employees, their tone begins to take on a much more respectful tune. Likely still competing with the same competition as in the early days, a few interesting things happen. Having won and lost more customers themselves, the founder has a better feel on why customers choose their product or that of the competition. Having become similar sized or larger than their initial competition, they become more comfortable with their place in the market. Having experienced the pain of scaling a team and a product, they start to have more empathy for why a competitor has made the personnel or feature decisions they have.
In talking about the competition, you hear the founder say things like “this is what the competition is good at and this is what we are great at, I’ve met their founder and he/she is a nice person, we look similar on the surface but have different long-term visions, etc…”
As the founder’s business continues to scale this cycle repeats itself. The founder develops new products that turn their point solution into a platform, opening up an entirely new ecosystem of competition and this process starts all over again.
As an early-stage investor, I pay a lot of attention when a founder starts talking about their competition.
If the founder bashes the competition, most of the time they are still figuring it all out.
If the founder talks respectfully and intelligently about the competition, most of the time something is really working with their own business.
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