Underdog Power: Succeeding in the Shadow of a Hyped Competitor

So here is a story I published a while ago at our Blog — one that might not only provide a little bit of guidance for some, but was also a cornerstone of a change of pace, a new pride within our team that led to something pretty amazing.

Sometimes your startup is up against a fast growing and high-praised newcomer. While you have to work a lot harder to make your product stand out, there are also a couple of benefits you can make count from being the underdog.

When we launched ChatGrape we did this in the midst of Slack’s Silicon Valley hype. As the chat market is a fast growing sphere, with a lot of different niche solutions, its hype didn’t affect our early access phase. But it made PR and marketing definitely more challenging. Stewart Butterfield and his team kicked out an appealing slick product and promoted it in an impressive way.

That’s why we went for the underdog approach, tried out new tactics and managed to maintain a weekly growth rate of 10% up until now. Here is a collection of things that worked out for us:

1. An educated market rocks

Thomas Schranz from Blossom once told me why he only works on commercial projects with strong competition:

“It’s simply more fun to tell a potential customer why I’m better than his current solution than explain to him why he should use me in the first place.”

Having a competitor that fills every major newspaper does one thing for you in particular:
It makes more people consider using a product like yours. If it wasn’t for Slack (and Hipchat before that) our sales pitches would still be about “Why chats are better than emails”.

That’s why at the beginning you should focus on converting rather than creating new customers. Even if you can’t convert them they provide you with vital informations on how you could perform better.

SaaS customers also tend to try out several products in their lifetime so make sure to list on all those nifty product chart pages like:

• Quora and similar ask-communities (“What is the best XY?”)
• Alternativeto.org and other product-compare-platforms
  (You could give ChatGrape an upvote while you are at it)
• Articles and Blogs reviewing players in your genre (at least in the comment section)

2. Cryptonite

Every weakness has a corresponding strength and the other way around.

With products deliberate weaknesses come from strong decisions a company made to enforce its USP. If your competitor has some exceptional strengths try to see the weak spots rooted in in them. If your product has immediate flaws, embrace the reasons that led to them.

The beautiful and consistent UX of Apple’s iOS products is the companies biggest strength. The weak spots that come with it are

• a limited customizability for customers
• one product with one price-point

Two things Android seized, which led to a huge head start in developing countries and the biggest piece of the mobile market.
Both companies are exceptional, but one started in the shadows of the other’s hype and became the yin to its yang.

• Go to the landing page of your competitors and screen which USPs they are trying to communicate.
• If they have an open support board find the biggest unresolved feature requests.
• What are the most requested functions in your product you had to say no to because they contradict your vision? How can you communicate them positively?

3. Three common differentiation tactics for Startups

“As long as you are different, there will be people who dig you”

- Underground rap god, Tech N9ne

You have to be differentiable in a comprehensible way to position yourself as a relevant alternative. The moment you can answer the question “What makes you different to XY” in a reasonable sentence you have found it. If you want to read up on competitive strategies take a look at “Porter’s generic strategies” because I will only brush the topic.

A couple of differentiation tactics a lot of tech companies follow:

Simplification (Apple it up!)

If your team consists of a good designer and you are capable of dismissing around 99% of your product features this might be the way to go.

Product: Eliminating most of the features, light appearance, smooth transitions.
Landing Page: Emotional cover images at the top, short marketing statements in huge typo, signup limitations.
Positioning: “XY is simple again”, “XY made easy”, “One-click XY”

Approachability (“Kickstarter-ing”)

Especially non-tech community based products profit from an approachable and open presentation. As your competitors grow it gets harder for them to maintain this startup-ish grassroots feeling, which you can utilize.

Product: Betas and early access features, using team member faces for tooltips and feedback tools.
Landing Page: Emphasis on the vision and the people behind it, faces, group pictures, personal direct speech.
Positioning: “Making XY personal again”, “connecting thousands of people around XY”, “A product from people that love XY”

1-up Security

If you have a strong development team and your sales strategy involves bigger corporations security might be a good argument … IF your competition isn’t using it of course.

And I’m not only talking about encryption technology.
With most cool SaaS products focusing now on cloud hosting a big chunk of security-savvy companies feels uninvited to the party. Being the “XY on premise” gives you sometimes a head start of years before your competitor moves into this section.

Important: If the product is not really save, this approach can backfire a lot. Two ways to counteract are involving the open source community or getting security advisors on board early on.

Product: On Premise, OTR, whatever makes sense to your customers
Landing Page: Locks, visualization of the method you are using, big business visuals (server rooms, skyscrapers, etc.)
Positioning: “XY on premise”, “XY is save now”, “XY in private”

4. Being there when the bomb drops

There is only so much a company can do right until it does something wrong. This doesn’t mean you should bet on it or wish it to your competing companies, but it’s good to have a game plan set up when it happens. Security breaches or other shit-storms are home-runs for your marketing team. It’s important to note that spitefulness isn’t getting you anywhere, smoothness is key. A smart note on Twitter that your two-factor authentification keeps you save from security breaches, like the one happened to your rival, would be a good example for a cool heads-up to your target group.

Another moment where competing businesses should be particularly aware are acquisitions.

Especially with community and news products the buy-in of a bigger player can be a gods gift. Independence is highly valued in these spheres and also news sources tend to take a closer look on competition during this time.

Examples: Twitch -> Hitbox.tv, Google Reader -> Feedly (in this case a discontinuation but the pivot of feedly should be noted), Flickr -> DeviantArt

Conclusion

There are a lot of good ways to grow your business even if you aren’t making all the headlines at the moment. Building a sustainable business is a marathon, not a sprint, even if it sometimes looks like it.
Keep differentiating yourself, build a goddamn awesome product and exploit your underdog image — you might finish up top in the end.

Felix is the CEO and Co-Founder of ChatGrape.com