Make Your Competition Fear You!

Growing up, I would play chess from time to time with my dad.  Early on (when I was around 10 or 11), he'd spot me a queen.  With an advantage like that, I eventually learned to put enough pressure on that he soon backed that off to spotting me a bishop.  A couple of years later, it was straight games only.

However, even after I'd gotten to the point where I could play him on the level, I wasn't winning many games.  Of course, this entertained my father.  After all, after I cracked his Stratego strategy, and beat him twice in a row, he never played that game with me again.  I'd love to say that this article ends with how I can beat him consistently at chess, he can still soundly beat me probably four out of five games.

But I can beat him one in those five.  And what's more, I know what's special about those games.  Those are the games where I play chess like a poker player.

In a strategy that made him simultaneously a good dad, and a poor tactician, he recommended many books to me.  One was "How to Think Ahead in Chess", which opens with an anecdote about someone who only thinks one move ahead in a game soundly beating someone who thinks ten moves ahead.  The thesis was that you needn't find your strategy through (in computer science terms) brute force, but rather through considering the right types of moves.  However, the other book that he recommended that is relevant was "Amarillo Slim in a World Full of Fat People", which was a biography of a notorious poker player.  I'd say the thesis of that was probably "play the man, not the cards."  The games that I've won since are due to the latter book, not the former.

How?  Well, I get the impression that my dad studied chess in order--opening game, then mid-game, then end-game.  And as such, his end-game is the weakest of the three phases of the game.  If I play carefully early on, making very carefully considered moves, the guy will run circles around me, taking advantage of every weakness that's been exposed in centuries of research on the game.  But if I advance the game as quickly as possible, I can level that playing field before he has too much leverage.  My end-game isn't spectacular, but if I'm going to win, that's where.  Might as well floor it!

I'm still terrible at doing this at a poker table, as I invariably revert to trying to do the math faster than everyone else at the table.  While this generally works for me, I'm not the kind of player that can survive tournaments, like Amarillo Slim could.  

But then, as much as I enjoy them, poker and chess just aren't my games.  Business is, and e-commerce in particular.

The way this manifests in that arena is obvious.  Put yourself in your competitor's shoes, and consider what they're most afraid of.  In poker tournaments, I'm weak because I get anxious when it's finally heads-up (only two players on the table), and I'm short stack (the one with fewer chips).  As the blinds go up (the minimum required to play increases over time to ensure that you don't end up with a stalemate) I tend to try to play conservatively.  I've made it to the point where it's just me and one other player, and I don't want to give up that position!  But when I revert to that position, they can just lean on me--they just need to raise pre-flop (early in the hand, when little about how the hand will end is certain), and that generally scares me off, and I bleed out one blind at a time.

I know, and have seen, that the way to avoid this situation is to fight back, blow for blow.  If you let the bigger player push you around, they will win.  So, to move the odds slightly in your favor, you need to make the other player feel that fear more.  You might lose, but you were going to do that anyway.  Better to go down swinging!

This realization improved my poker game, and my chess game, considerably.  When I have the advantage, I push it.  When I don't, I make the opponent worry that I might.  

When I was CMO of PoolSupplyWorld, my favorite targets were sites we'll call PC and ITS.  PC was another small site, but they had a vast parts catalog, and solid organic ranking at the time.  ITS was the largest pure-play online retailer at the time, coming from a history as a catalog company.  

So, what was PC afraid of?  Admittedly, I don't think their leadership thought anything like I did (sorry, Rob, but we're cut from different cloth), so this was a purely strategic thought exercise.  Their momentum was coming from organic traffic (which is inexpensive) and parts (which are low AOV, but high margin).  Therefore, I pushed to revamp our content development to target their biggest organic terms and categories, starting to erode their dominance in those searches.  Where I couldn't push them around organically, I'd punish them with paid ads, ensuring that they were never uncontested.

ITS, on the other hand, had a very dependable customer base.  When I'd check Google Trends for their brand and ours, you could see an obvious bias toward the mid-west, where their brand was strongest.  This came from their legacy as a catalog business.  Also, they tended to out-maneuver us on some very seasonal categories, where we'd run out of either stock or margin before they would.  We couldn't beat them on their home field, so we'd spread out, attacking them on the rest of the catalog, where our inventory might outlast theirs.  Further, they didn't have the same reputation for quality of customer service as we had, so we knew that we could keep the heat on, and win in the long run.

Over time, between our efforts and Amazon's (which, I'll admit, are probably greater), PC folded, selling to ITS for what I imagine was a song.  We put a kill marker on the side of our plane at that point, and retargeted our guns for ITS.

The next phase of this battle was a bit beyond my control, but played well into my strategy.  We were acquired by the largest (and only) national chain in our niche.  If you're ITS, your biggest fear is that PoolSupplyWorld suddenly has access to the resources and infrastructure of that behemoth.  In 2013, that nightmare became reality for them.  You can be sure I didn't let them forget it.

Since I left the pool supplies industry last year (to start StatBid), I'm not sure how that's been playing out, but I'm sure not betting against my former colleagues at PSW.  I guarantee that ITS is feeling like a short-stack player in a heads-up situation at the end of a big tournament.  They'll have to be very clever to survive, and the past few years don't make that seem likely.

Still, Amazon is the tall stack at our table, fellow retailers.  They have by far the most chips, and they're more than happy to bleed us out slowly.  You should be thinking about how to play against them every day.  Make it hard for them to compete with you.  There are a number of ways, and it's up to you to find them, and go all-in on those opportunities.  

The bottom line is this--your competitors have the same kinds of advantages, fears, egos, and concerns you have.  The key is to make them feel those fears more sharply than you do.  If you can do that, then you can probably even beat them in ping-pong with a cast iron skillet, like Amarillo Slim would have.