The two biggest mistakes business leaders can make in a competitive space are thinking their competitors are too smart or, alternately, too dumb. The game on the field has shifted dramatically over the past 12 months, and what matters to a startup today is much different from a couple of years ago.
In the next installment of CRO Confidential, Founders Fund Partner Sam Blond, previous CRO at Brex, goes head-to-head with the CRO at Divvy, Sterling Snow, previously bitter rivals turned curious comrades. Snow and Blond dive deep into competition — how to position yourself against competitors and make the most of that competition.
Brex and Divvy are competitors in the expense management space, with many deals going up against each other. There has always been a ton of respect there and a bit of animosity, too, because of how competitive the businesses were.
This poses the question: Does staunch competition lend itself to better business? Psst… the answer is yes! Let’s see what Snow and Blond have to say about competition.
Choose Your Market And Attack
Blond shares that the key to beating the competition is identifying a segment where you have a strong product-market fit early on. Brex did an excellent job dominating the startup, VC-backed market, and when Divvy stepped into the space, they had two choices:
- Directly compete with Brex’s market
- Pick a different market altogether
Snow joined Divvy way before they had raised money, so scrappiness was the name of the game. He reminisces about a local tech conference with 15,000 people, and they couldn’t afford a booth. So they stuck an SDR inside a purple suit and cowboy hat, taped $2 bills onto him, and had him walk around talking about Divvy.
In these early stages, creativity and differentiation were necessary next to a thriving competitor like Brex, so Divvy decided to take option two and focus their efforts on mainstream America — the plumbers, the electricians — instead of VC-backed startups, and they did it well.
Being deliberate about the segment you’re launching into will always be the right path forward for any company. Choose your segment, attack that segment, acquire meaningful market share, and expand from there.
Don’t Race To The Bottom Line
A common problem for competitors is using discounts as a value proposition. When you position yourself as the better deal, it becomes an addiction that’s difficult to quit. So if your SDR team’s muscle is to shout “discount, discount, discount!” in an effort to win the deal, you will suffer when the game changes.
And it has.
A major takeaway for Blond in this competitive environment is to choose the higher-priced product because it’s much better to be perceived as the premium product in the space versus the cheapest one.
Snow shares that if he could do it all over again, he’d stake his claim on things that have little to do with the ever-evolving math problem of how discounts, risk, and top-line interchange affect margins and instead position a company’s value on the product itself.
Don’t Trash The Competition
Once upon a time, a couple of cars were wrapped in Divvy branding and parked outside the Brex office in San Francisco. This was how deep the rivalry ran.
While a little good-natured harassment between competitors is always a good time, should competitors stick to their strengths and not mention each other to customers or play on the negatives about another company to gain an advantage?
“The right move is never to trash your competition. Humans pick up on that fast,” says Snow.
Blond says, ”There are creative ways to describe the differences between you and your competition to increase the probability of winning the deal without being perceived as bashing the competition.”
Some business leaders are competitor obsessed, while others completely ignore them. Somewhere in the middle keeps you on your toes, letting you know what the competition is up to while maintaining breathing room to get creative and focus on your company’s growth.
You can be most effective by asking the right questions, figuring out what matters to the consumer, and then sharing the differences to help you close the deal. You never know how someone will impact your life, even a bitter rival, so always stay open to learning from them and being respectful because you may be doing a podcast with them one day.
Use Competition To Your Advantage
Brex did a billboard campaign years back, a sort of “thank you for growing with us” messaging. Divvy took this idea and wove it into its brand identity, making it better than Brex ever did. Which goes to show that you don’t have to reinvent the wheel to beat the competition.
You can use the competition to your advantage by learning about their offerings and then using those differences to make your product look better.
For Brex, the thing that universally resonated with folks was simplicity — ease of use, ease of adoption, ease of rollout. Positioning their brand as the simplest player in the space gave them an advantage where they could have had a weakness because Divvy had a sophisticated budgeting tool that Brex didn’t.
Instead of letting this lack of features get them down, they used it to say, “Hey, you don’t need all of that sophistication and time-consuming rollout for your corporate card program. You just want it to work. Here you go.”
Snow shares, “As businesses, you get to choose which flags you want to put in the ground. Someone’s going to spin that positive or negative and make your cool thing look like a headache.”
Ninety-nine times out of 100, people will say that highlighting the differences between two close competitors is beneficial. You just have to highlight them in a way that clearly shows yours as the winner.
In today’s market, you can position your product as something that will, ultimately, save a company money. Today is a different world, and money matters more. One thing will likely never change, and that’s the benefit of healthy competition. Competition forces people and companies to grow. If they don’t grow, they become irrelevant.
Key Takeaways
- Identify and be deliberate in how you engage your market early on.
- Stake your value on your products, not the bottom line.
- Don’t trash the competition. People don’t like it.
- Use your competitor’s differences as a way to elevate your offerings.
