Chapter 3

Customers and Competition

In this chapter, you will explore two important fundamental components of a winning business model—the market (customers) and industry (competition). Your startup must be different in a way that’s important to your customers. Without meaningful differentiation, you’re forced to compete on price, which puts your startup on death row.

Here, you’ll learn how to use your competition to gain an advantage, how to break down a market, and why that’s so important for customer acquisition.

Most importantly, this chapter gives you the opportunity to step away from your idea and take a broad look at your proposed battlefield. As Warren Buffett famously said, “When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is usually the reputation of the business that remains intact.” No matter how good you are as an entrepreneur, it’s hard to succeed if you pick a shrinking market or a cutthroat industry. Avoid the most common pitfalls and learn how to identify promising opportunities with the strategies presented here.

Break It Down

Ride the Wave

Know Thy Market

WII.FM—Your Favorite Radio Station

Tell Me What Sucks

You Can’t Boil the Ocean

Reframe the Competition

Make a Competitive Matrix

Differentiate or Die

Competition Is a Good Thing

Follow the Leader

Fast Followers Finish First

10× Better

You Need a Moat

Zero Degrees of Separation

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