Is Your Startup Worrying About the Wrong Competitors?

Most entrepreneurs I meet are surprisingly obsessed with their competitors and the potential of other people to steal their ideas. I get asked to sign NDAs at least once per week (which, of course, I never do because?NDAs are ridiculous). I constantly get questions about filing for IP. And nearly every pitch I see includes a slide about competition. In fact, an article I wrote years ago about?how all entrepreneurs screw up their competition slide?is still one of my most popular articles, and I often see it cited around the Internet.

Should entrepreneurs be so suspicious? Do they genuinely need to worry about other people stealing their ideas?

Honestly, I don’t know.

I suppose it partially depends on what’s being built. I find myself thinking someone developing a new iPhone game should be less worried than a researcher developing a molecule that shrinks cancer cells. The cancer-shrinking molecule seems like it’d be more valuable and easier to steal/replicate once a competitor understood it. But maybe I’m not being fair to game developers.

Regardless, one thing I do know is that, when entrepreneurs get overly suspicious, they tend to obsess about the wrong threats. Specifically, the people you think are your biggest competitors probably aren’t your actual competitors. In fact, they’re probably helping you more than you realize.

Why Instagram and TikTok aren’t competitors

To explain why your biggest threat probably isn’t the threat you’re most worried about, consider a question I pose to the students in my social marketing course at Duke. At some point early in the semester, as we’re mapping the broader social media landscape, I’ll ask a question like “Who is Instagram’s biggest competitor?”

The answer changes depending on the year and which social platforms are trending, but, currently, the answer I hear most often is TikTok. In fact, when TikTok was blowing up in mid-2020, there was lots of talk about how it was?going to topple Instagram.

If you were an overly suspicious entrepreneur running Instagram when TikTok started emerging, you’d probably be scared, right? Some new upstart filled with dancing tweens was going to destroy your billion dollar cash cow. But, of course, even as TikTok has ballooned in popularity, it's also worth noting that Instagram is bigger, more popular, and more profitable than ever. So what’s going on? Why hasn’t TikTok caused Instagram to shut down?

Despite appearances, I'd argue TikTok isn’t actually Instagram’s biggest competitor. Sure, they kind of look the same. And sure, their users overlap. And sure, when people are actively using one service, they can’t be actively using the other. But those aren't the only things that matter. In fact, those similarities help both companies thrive.

Fundamentally, TikTok and Instagram rely on the same usage behaviors. In both cases, people quickly scroll through nuggets of user-generated content on their phones for entertainment. As a result, both apps are training users to do the same basic thing. Yes, Instagram would rather users spend all their time in Instagram, but spending time in TikTok isn’t entirely bad news. Users are still on their phones, flicking through content, and being entertained. So long as people are happy doing that, it’s only a matter of time before they switch back to Instagram. Maybe not this phone session, but they will at some point.

Do you know what is genuinely bad for Instagram? It’s bad for Instagram when users put down their phones and turn on Netflix. When Instagram’s users watch Netflix, they’re training themselves to be entertained in a completely different way. The more they watch Netflix, the more likely they are to watch HBO Max or Prime Video or some other streaming service when they get bored of Netflix, and that makes them less likely to stare at their phones.

If you want proof that Netflix is a bigger competitor to social media than social media platforms are to each other, just take a look at the Netflix catalog. Have you noticed an?increasing trend?of?Netflix documentaries?about?how horrible social media is?for?the world? That’s not accidental. That’s Netflix subtly (or not so subtly) telling users they should be spending less time on their phones and more time on their TVs.

Your enemies are more like your frenemies

The relationship between Instagram and TikTok is a good reminder for entrepreneurs that the companies they perceive to be their biggest threats aren’t entirely threats. In fact, the companies doing similar things to your startup are often as likely to help you as hurt you.

Even if another startup is selling the same thing and serving the same market, that company is doing you a favor.?Every time that company buys an ad, rents a booth at a trade show, or demos its product, it’s indirectly teaching the market more about what?your?company does and why that service matters.

True, some of the people in your market will buy from your competitor, and that’s a bummer. But lots of people won’t buy from your competitor, too. After all, no company owns 100% of a market. Some of those other people will still be looking for a solution to the same problem, they’re better informed about what they want than they were before talking to your competitor, and they have one less option of where to buy from. In my mind, that’s a great thing.

Capitalize on this!

When another company is trying to sell a similar product in the same market, don’t freak out. Instead, you should be trying to ride their coattails.?Position yourself as an alternative option solving the same problem. The people who didn’t buy from your competitors but still need that solved will find you and become your customers.

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Aaron Dinin teaches entrepreneurship at Duke University. A version of this article originally appeared on?Medium, where he frequently posts about startups, sales, and marketing. For more from Aaron, you can also follow him on?Twitter?or subscribe to?Web Masters,?his podcast exploring digital entrepreneurship.