Competition. Am I screwed?

I’m advising a first time web entrepreneur on a new service. This week he discovered a directly competitive service that is much further along and already launched. He wrote me asking “am i screwed?”

Here’s my response:

The answer to your question is “you are not screwed.”

I believe competition is more good than bad. To the extent competitors exist and have customers, it validates your direction.

Also, don’t be ashamed of copying good ideas. If you see something they are doing that their customers love, copy away…you can replicate what they’ve done faster than it took them to figure out and build in the first place — advantage you.

You can also learn a lot from their customers… pick 10 at random, email or call them and ask about their product. They’ll tell you what’s good and what’s bad — perfect learning for you. I’m surprised how many startups don’t bother doing this…it’s one of the easiest ways to validate your ideas. Ask their customers to rank their ten favorite features and top 5 missing features.

However long you work on your product, you’ll come across competitive and similar products. Don’t let it dissuade you.

I had an e-commerce startup in ‘98 that was ahead of its time. During the six months I worked on it I could not find a single competitor. Then one day Yahoo bought a company that was indeed similar — and much further along — so I panicked and sold my startup to a larger company, thinking “well, now that Yahoo has bought this competitor, I’ll have no chance as a standalone company.” In retrospect that was a huge mistake and one of my biggest regrets. I should have kept on going as an independent company focusing on building my product, adding value and getting customers signed up. E-commerce is big enough for tons of companies. One competitor doesn’t matter.