‘Decoding’ Starting Up with Vani Kola: Chapter 4 – How to think of Competition?

Early-stage startups often fall into a trap of dismissing competition or overestimating their own unique advantage. Statements like, “We have a superior moat” without defining it or “We have no competition” can sound promising in pitch decks but often crumble under scrutiny.

I remember, during the early days of e-commerce in India, many startups believed they had no competition or had an unassailable lead. Then, Amazon entered the Indian market. Initially operating as a B2B business, Amazon shifted to B2C in 2012, committing a $2 billion annual budget for its India operations. This financial and operational power proved lethal for most e-commerce startups. The result? Many e-commerce startups were wiped out, leaving only giants standing.

The lesson here is clear: dismissing competition can be dangerous. Customer loyalty is fickle, driven by pricing, convenience, and superior service. A clear example of this is airlines - many loyal customers of Kingfisher or Jet Airways now fly Indigo due to its operational efficiency and affordability.

In our fourth edition of ‘Decoding Starting Up’ – we talk about how entrepreneurs should think about competition. Neglecting the realities of competition as well as getting completely consumed in just beating other players are both harmful for a startup in the long run.?

In a recent video I saw, Deepinder Goyal, Founder & CEO of Zomato, shared his take on the fierce competition between Zomato and Swiggy — a rivalry that has shaped the way majority of Indians today consume meals, transforming the Indian food delivery market. What stood out in his perspective was the relentless drive for improvement that the competition brings. He clearly emphasized that while both companies are vying for market share, the real competition is meant to be internal - a race to constantly evolve, innovate, and deliver better experiences for consumers. Had there been no Swiggy, Zomato would not have been what it is today and vice versa!

When one takes such a mentality, the focus shifts from being competing with the other players in the market to becoming better every single day. This mindset often pushes one to stay sharp and build a product that keeps raising the bar in customer satisfaction, operational efficiency, and innovation. Competition isn't about tearing others down—it's about lifting one’s own game.

Invariably, when you pitch to VCs – they will look at competition. Early-stage founders lose credibility when they say a giant like Google or Microsoft is their competitor. They may compete later, but a founder needs to have a clear path to victory today. For instance, at an early-stage, Google didn’t just say it competed with Microsoft. Instead, it demonstrated 100x better search capabilities, which became its edge.

A founder needs to acknowledge competition—dismissing it erodes credibility. Clearly articulating why their offering is better in terms of technology, cost, or customer experience and presenting a clear path to gaining market share today while building a defensible moat for tomorrow helps build strong credibility with VCs and helps a startup in the long run.

Many pitch decks I look at always have a competition slide – who is building something similar and where they are at. Founders lose credibility with investors when a pitch deck like this comes to them.

Founders need to think about competition in a more strategic and balanced way, one that helps drive their company forward without falling into the trap of reactive decisions. This requires shifting the perspective from simply trying to outdo others to understanding how competition can be a force for good, shaping better decisions and stronger companies.

Here are few points I’ve noted down to help entrepreneurs decode the way they should look at their peers and use it in a positive perspective for their own good, especially when pitching to a VC.

1. What makes your business unique?

In the early days of building a startup, it's common to look at what others in your industry are doing. But obsessing over competitors’ moves can lead to a reactive strategy. Reacting to everything they do may pull you away from your core mission. Instead, the focus should be on what truly differentiates your business.

To think about competition smartly, start by asking: What makes your business unique? The answers can range from execution to customer obsession. Once somebody understands what is unique about their business, they start to make sense of what’s the competitive advantage or moat in the market.

Even in crowded markets, I advise founders to focus on building distinct value. Competing on price is easy till one runs out of funds, it eventually becomes a losing battle. Instead, build a moat by creating an experience or service that others simply cannot replicate.

Taking an example of another successful Indian internet company – Rapido, it was founded in 2015 with the goal of solving urban traffic issues by offering affordable bike-taxi services. Unlike Ola and Uber, which are heavily invested in four-wheelers and traditional cabs, Rapido carved out a niche in two-wheeler mobility, especially in Tier 2 and Tier 3 cities where it quickly gained traction.

Rapido as of date, holds a significant share of the bike-taxi market in India. While Ola and Uber have also entered the bike-taxi space, Rapido has managed to lead in this segment by focusing on affordability, convenience, and strong local operations. This has allowed them to grow steadily despite stiff competition from the more established rivals.

Rapido carved out a niche for themselves and executed brilliantly to reach where it is today.

2. Learn from your competitors

Look at competition more positively. It’s a sign of market validation if there are other players also building for the same customers! However, when we’re too focused on what others are doing, we can lose sight of our own goals.

Think of competitors as providing valuable market insight. What are others doing well? What are others missing out on that one can capitalize on? Use this information to refine the strategy.

The goal isn’t to beat competitors at their own game but to understand the market well enough to carve out your unique place in it. When one views competition as a source of learning and inspiration rather than a threat, it drives more clarity and focus rather than distractions.

3. Always take a long term perspective

The goal isn’t to be better than someone else this quarter—it’s to build a company that can thrive for years to come.

To do that, founders need to maintain a long-term perspective. In the short run, competitors may seem to be ahead. But what matters more is a founders’ ability to stay the course, make smart decisions, and stick to their company’s mission.

Startups that succeed over the long term are the ones that play a different game. While it’s important to keep an eye on your competitors, don’t get bogged down in short-term wins and losses.

In conclusion, how founders think about competition can become a determinable factor of how well they navigate the entrepreneurial journey. Instead of letting external competition define every move, focussing on being the best version, deepening the differentiators, and playing the long game can immensely help the business.

Competition is a reality, but with the right mindset, it becomes a driving force that makes a startup stronger and more resilient. Founders that obsess over providing a superior customer experience, even in highly competitive markets usually end up winning.

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