Should You Care About Competition? (Classic)

What's up, everyone?

This is Alex Lieberman, co-founder and executive chairman of Morning Brew. Welcome back to Founders Journal, my personal audio diary, where I give you, the business builder, the tools you need to think better in order to build better, whether that's building a business, a team, or a new product. For the next little while, we're going to be republishing classic episodes of Founders Journal. Why? Well, first, I think they're really good episodes, and with so many new listeners over the last few months, It's very likely you haven't even heard them. Second, I am spending the month of May evolving Founders Journal so that we can make this show as good as humanly possible for the next generation of builders and entrepreneurs. I would love your help as I dream up the future of this show. So once you've listened to this episode, shoot me an email to alex@morningbrew.com and tell me what you'd like to see from me moving forward.

Okay, that's the update.

Now time for the episode. In today's classic episode, originally published on September 13th, 2021, I talk about how much you should focus on your competition as a founder or an employee. So let's hop into it.

Every single business has competition. And if you don't think your business has competition, you're probably lying to yourself. But the real question is, how much should you actually think about competition and about the things outside of your control? That's what I want to dive into today. And I want to start with what is seemingly an unrelated story, but I promise there's relevance. So on the side, outside of Founders Journal and Morning Brew, I've been looking to embark on a very strange project, and that project is to buy mini golf courses around the US.

Why?

You might be wondering. Well, I thought it'd be a fun operational project. I also love mini golf. I played it a lot growing up, and I see this opportunity to upgrade mini golf courses to be like Topgolf, which is, you know, the tech-enabled driving range business which sold to Callaway, the golf maker, for $2.6 billion. So what I've been doing as I try to dig into the space, understand the economics of mini golf courses, see how much opportunity there is to buy up courses, is I've been reaching out to owners. It's a super fragmented market. So I've literally been going on LinkedIn and messaging anyone who has the title CEO, president, or founder and has the words mini golf in the title of their company. And I've been reaching out to them and seeing if they would be interested in discussing selling their business. I would say 80% of my messages, as most cold messages are, were met with radio silence. Then there were a handful of people who responded basically in a nice way saying, no, not interested. And then there were a few who said, sure, would be interested in taking a call. I'm talking to those people now. But there was one message I got from my LinkedIn DMs that stood out to me most. So for context, I reached out to this owner and the owner said they wouldn't be interested in selling unless it was at an insane price. And I responded basically saying, The insane price you want to get, I'm not willing to pay. But regardless, I would love to hop on a call to just learn more about the mini golf business so that as I go about potentially buying my own, I'm just more informed. It seems like a harmless question to ask, just trying to learn from people who are in the space. Here's what this mini golf owner said back. Quote, as much as I love helping people, I need to keep my business secrets close to my chest on things that I've learned throughout the years to create profitable Side businesses, end quote. This was so interesting. It was interesting not just because I wonder to myself what possible trade secrets exist in the mini golf business, but also because this is a mini golf course in the middle of Ohio, and unless I am looking to build a course within 30 minutes of this person's course, competition isn't remotely a thing. But this made me think back to the question of competition in the context of my own business, Morning Brew, and over the course of 6 years of building it, how much my co-founder and I actively thought about competition. Here's what my philosophy was from day one of building Morning Brew. My view was that competition will never be the thing to kill us. Why? Because media is massive. Media has been around for centuries. There's hundreds of media companies. There's billions of people who consume media. So there's just too many consumers with disparate interests and different demographics for any one company to win. And so my view is, if competition isn't going to kill Morning Brew, what would kill the business is poor strategy, not getting the right people to work for us, and poor execution on our strategy. And when I think of poor execution, the big thing that comes to mind is just like not creating good content. So if the normal reaction, like Mr. Anonymous Mini Golf Owner, to competition is about being closed off and tight-lipped with your information, holding on to your trade secrets, keeping them close to chest in order to maintain whatever competitive edge you think you have, my default was always to do the exact opposite. Become friends with your supposed competitors, share information with each other. And my view is that if you do this, you can actually give yourself a better chance of succeeding because you have more information to build a sound strategy around your business. And so in the early days of Morning Brew and even in later days, I would talk about everything from our revenue to our advertising rates to our strategy. Part of this was because I wanted to create an environment for me and the person I was talking to to be open and transparent. But also, I always told myself that information on its own isn't going to get someone to beat us. Sure, information is valuable, but building any business requires grit. It requires you being obsessed with the mission where you're okay working for many years without paying yourself well or seeing any sort of light at the end of the tunnel. And you also just need great talent. Without great talent, you're not going to be able to execute on whatever your game plan is. And so I thought to myself, if our business went down because of anecdotal information that I gave to a supposed competitor in a massive ocean of media, my view is we deserve to lose because that isn't what was going to sink the ship, which, by the way, was definitely not the philosophy of everyone in our space. There were absolutely competitors, old media companies, new media companies that had no interest in having a relationship with us. I'm not saying that's bad. I'm not saying that's the wrong way of doing things. It's just a fact. And that was just not our approach to building a business. Now, I want to talk more about how you should think about competition actively in whatever business you're working in, whether you're running the business or you're an employee. But first, a quick break. Let's hop back into it. And so I told you about my philosophy over the last six years of Morning Brew and how I would actively talk to our competition, as well as the message from Mr. Anonymous Mini Golf Owner that prompted this whole journey down memory lane and thinking about competition. But I also was re-reminded of this mental model around competition after listening to a podcast episode. It was between Reid Hoffman, who founded LinkedIn, was early at PayPal, works at one of the largest VCs in the world, and Sridhar Ramaswamy, who co-founded a search engine startup after working for 15 years at Google. And what Ramaswamy says is that creating a compelling product goes a heck of a longer way than simply worrying about, hey, is this going to be copied if we are successful? Obviously, I agree with his sentiment, but also it's especially insightful coming from a guy who literally ran Google's advertising business, which did $147 billion in revenue last year. Yet he went and built another search engine. Basically, what he and Reid Hoffman discuss is that the key to actually making it in business is ensuring your product has consistent, strong differentiation. And that's exactly how Sridhar approached it with his search startup, Neeva. Neeva doesn't revolutionize the search engine, but instead it takes a totally different approach to monetization and user experience. Instead of what Google and many of the other search engines do, which is making money through advertisements by tracking users' data across the internet, Neeva is a subscription-based search engine that doesn't track customers at all. Basically, it has customers pay for the right to not give up their data. By the way, the other big point I'll mention here is that if you're actually crushing it as especially a startup, big tech giants taking notice of you is a great problem to have because typically what you'll find as you're building a business is that a lot of your competition will come from dozens of other equally motivated startups and early-stage companies rather than large incumbents. Why is that? Well, first, because typically the opportunity that a startup first goes after doesn't appear big to a large company. And for a large company to allocate resources to a new opportunity, it has to be something that will generate hundreds of millions of dollars in immediate opportunity. That's why you didn't see Marriott building the Airbnb business. It's why you didn't see taxi businesses building the Uber business. Things look really small in startups until they immediately become massive. The second reason is because large businesses are like cruise ships, not speedboats. It takes a cruise ship a shit ton of time to turn and change direction, even after a new destination or idea has been identified. That's that's actually the best advantage of startups. Speed and focus is generally the thing that startups have. The only advantage over large companies on, and it should prevent you from worrying about competition, at least with big tech and large businesses, for a long, long time. So let's bring this back. If you're a founder, stop thinking about your competition and start focusing on how you can do everything humanly possible to create a delightful and differentiated experience for your customer. And if you're a manager or an employee within a business, especially a startup, who's thinking about joining joining a new company, I would actually run a sniff test on how much it seems like the founders and senior leaders actually care about competition. And I think you can pretty accurately gauge the quality of a company you're thinking about joining by how little leadership talks about competition and how much they talk about delivering something truly unique to their customer. I would love to hear your thoughts on competition because I know not everyone's going to agree with me. And there are absolutely examples where thinking about competition matters. People would argue that Clubhouse, the social audio business, should have thought about competition where Twitter, Facebook, LinkedIn, and every social platform basically created Clubhouse in a matter of months. I think people would also argue that Blockbuster should have thought about competition and maybe they wouldn't have been run over by Netflix.

Let me know what you think.

Send an email to alex@morningbrew.com or DM me on Twitter @BusinessBarista with your thoughts on how much of your mindspace should be focused on competition as a founder or a manager in a business. And finally, if you enjoyed the episode, please share it with a friend that you think would love to use Founder's Journal as a tool for thinking better in order to build better. As always, thank you so much for listening, and I'll catch you next episode.