Matt Poulson argues that competitors are actually a good sign: they prove there's real demand and save you from expensive customer education. No competitors often means the market failed before or doesn't exist. He'd rather build a small profitable business than create an industry like Steve Jobs did.
Hey, guys, Matt Poulson here recording this video, quick to talk about an issue that's come up several times in the last few weeks or months. And it's a question that a lot of new entrepreneurs have and is, should you try to build a business where there are no existing competitors? Should you try to build a business that nobody else is doing? It's something that's brand new. Nobody's doing it. So. So will that give me kind of an edge on a market? Will that give me a head start? Will that help me along the way? And a lot of people think that competition is a bad thing. If you have lots of competitors, it's harder to do sales and you just have a harder go of it because there are so many other people trying to do what you want to do. So I wanted to address that topic a little bit. And it's easy to think that if I have no competitors, sales are going to be easier. But I think that's wrong. I think having competitors is a good thing. And I think the reason is that you don't have to educate your market. If nobody is doing what you're doing, you have to explain the value of people to people, your customers, of what you're going to do. They don't already know that they need your business. If you're a realtor, people know they need a realtor when they sell a house. If you are a plumber, they know you need a plumber when your toilet breaks. If you're doing something that hasn't been done before, if you're doing, say, some kind of outdoor. Outdoor patio thing that I'm staying right by my outdoors, that doesn't exist yet, or you're going to make people an outdoor room and it's some fancy, cool thing, but nobody knows what it is. That's kind of a unique challenge because you have to explain to people that they need your product if they don't already know about it. So that's kind of the first challenge. Two, the other possibility is if you're trying to enter an industry with no competition, is that other people have tried it before and it just doesn't work for whatever reason, that could be the case. If nobody is doing what you're doing, that means nobody is making money doing what you're doing right now. Somebody else could have tried it. It failed. That's often the case. So if there is nobody making money in your market, that could mean there is no market. There could mean there's no demand for it. It's just not a viable business model. And that's kind of the risk that you're taking when you're doing something that's brand new. When you're entering the existing market, I think you have an easier time because really what you just need to do is build a slightly better version of something that's hardier out there. So If I sell MarketBeat, my premium subscriptions for kind of a portfolio monitoring service for stocks, I don't have to do a better job. I don't have to. Like, I know people are already paying for that because people pay Morningstar and other companies for very similar things. So I know that market's out there. I know that the financial media space is a large and profitable industry. I know there are big established players like the Motley fool, the Wall Street Journal, whoever else, that are already making money doing very similar things. So if I can do the same things they're doing and maybe do something a little bit better than they are in one space over another, I could grab a share of that industry. So that's kind of always been my belief. I like industries with competition, and just because it's. That means people are already making money. It's kind of a proven thing. Yes, there are certainly people like Steve Jobs that invent industries from ground up and have a vision for the future. The Elon Musk of the world. But, you know, let's be honest, most of us aren't those. I'm not any of those guys, and I probably never will be. I'm perfectly content running a small but profitable business with a handful of employees in Sioux Falls, South Dakota, and that's going to be my life. I'm probably not ever going to go build a 10,000 employee company that's trying to change the world, because that's not me. And that's really what you need if you want to be somebody that is going to invent an industry from the ground up. That's my baby over in the background. Yeah. So take this for thought. So some food for thought. You know, if you're thinking about starting a business in a brand new industry, maybe, maybe think twice about that. If you have no competition, nobody's doing that. Don't take that as necessarily a green flag that you're good to go because nobody else is competing with you. Take that as maybe a yellow or an orange or even a red flag that it may not be a good industry to be in competition is, I think, a good thing. And you know, somebody else is making money in, chances are you can, too. Hope you enjoyed this quick video. Don't know if I'm going to do any more of this. Actually sat down to write a blog post about this. I thought, you know, maybe it would just be easier to talk about it on a video. So here's my video. Bye.
