People sometimes ask us how much we look at the competition. The answer: not much. We can’t control what they do. We can control what we do. So we focus on that.
Someone who responds to a constantly shifting landscape with a similar approach: Conan O’Brien. In “Building a Home in Late Night’s Shifting Sand,” he talks about why he doesn’t pay attention to the incessant chatter about time slots, competitors, etc.
“Maybe I’m a bumbling, Gomer Pyle fool who should be more concerned about this stuff, but I can’t control what’s going on around me,” Mr. O’Brien said. “And TV is changing so much, I don’t think anybody in television knows how it’s going to play out.
“A lot of that is up to me. If I do a good, funny, and fresh ‘Tonight Show’ every night at 11:35, it’s going to be successful, and it’s going to be irrelevant what everybody else is doing.”
That’s it. If you make something good and fresh, what everyone else is doing becomes unimportant.
The best part of this approach: It liberates you. You don’t have to obsess over others. You only worry about what you can control which helps keep you sane.
Here’s some Conan fun:
Update: Switched embed from Hulu to NBC clip. [thx Peter]
Jon Gretar
on 20 Feb 09Damn Hulu… Bringing region codes to the internet.
Mauricio Gomes
on 20 Feb 09I think if you are really good at guessing where the market is going or if you yourself represent your market, then you don’t have to take cues from anyone else. Otherwise you have to.
Seth recently posted something along these lines.
Sometimes watching your competitors is like listening to customers you don’t yet have. Your competitors or customers may not be asking or solving the right thing, but at least they are revealing the problems.
Timothy
on 20 Feb 09All I have to say is that anything Conan related is hilarious
Scrivs
on 20 Feb 09I encountered this situation when working on a new site of mine. When talking to my friends about the ideas I was told that X did this and Y did that, but in building the site I focused on what I wanted. Moving forward with the site it’s not my job to be concerned what the other sites are doing, but that doesn’t mean I shouldn’t be aware.
Knowing about your competition is healthy. You guys would admit to that yourselves by knowing what Microsoft Project (for example) does. However, now that you have an established base it is much easier to focus on only you.
Another company that does this extraordinarily well (no surprise here) is Apple. How many people blasted the original iPod at its launch because it didn’t do what the competition did? How many people felt the iTunes store needed to move to a subscription model because the competition was doing the same? I’m sure Apple was aware of these things, but it didn’t effect their vision moving forward.
Also knowing what everyone else is doing can help you greatly in marketing. For example, a Basecamp tagline could be something like
You can say that because you know your competition has 10x more features than you, but to you that isn’t important. So be aware of your competition, but don’t let it effect your decisions on how you carry your product/business forward.
Peter
on 20 Feb 09I know it’s Hulu I should be angry at, but I really hate it when people link to Hulu videos. Not all of us are in the US, y’know?
Neil Kelty
on 20 Feb 09@Peter: So us US residents should lose out on content because of where you live?
JF
on 20 Feb 09You guys would admit to that yourselves by knowing what Microsoft Project (for example) does.
Not at all. We never once looked at MS Project while building Basecamp. We never asked ourselves “How does Project do this” or “Why does Project do that” or “How did they implement it” or “What do we need cause Project has it.” Not once.
We built what we needed. What we needed had nothing to do with Microsoft’s decisions or any other software vendor’s decisions.
Jason
on 20 Feb 09If we assume that every market is broken into its most basic elements (individuals) and those individuals have an almost limitless ability to sift through and discover new information, then the best anyone can hope for is to make a connection with the right individual(s) who is a part of and has a 2-way relationship with the right niche community, which is a part of and has a relationship with a larger community, and so on…
Small companies have (realistically) 2 tasks when it comes to connecting with a market in this way:
1) Do what you do the best you can possibly do it (which isn’t always to say the highest quality or most intricate, but define and be what you are as whole-heartedly as you can…)
2) Make yourself (and your ideas) as readily available for discovery and adoption as possible
The competition (in this way of thinking) becomes irrelevant, because you’re realistically serving two different “markets”.
37 Signals doesn’t, I believe, steal away “MS Projects People”... they take the 37 Signals People who happen to have been using Projects because they hadn’t been exposed to the 37 Signals Experience. Once 37S is on their radar, there’s no force on earth that could stop the switch… it’s just the right fit for them, in their world, at that time. Just as, for true MS Projects People, there’s no way they would ever switch to a 37 Signals product.
Jon Gretar
on 20 Feb 09@Neil: No. It’s a question of holding the dirty business practices out of the internet. This is the region code all over again. Hulu is what happens when the battle over the internet against greed is lost.
Plus I’m not sure what the percentage of US users are on this site. But I would be suprised if more that 25% of the readers of this blog can see this video. So using Hulu in a blog post is comparable to having a broken link or something in your site.
Matt Brown
on 20 Feb 09I have purposely not analyzed my competitor’s feature set, being that I don’t want them to corrupt my vision. I have however, checked out their price plans to see what they are charging.
I agree, if you worry about competition all the time, it will drive you nuts.
JF
on 20 Feb 09Just checked our stats.
Over the last 30 days:
57% of the people who read this blog are in the US.
7.85% are in the UK.
6% are in Canada.
2.75% are in Australia.
2.7% are in Germany.
Then it’s into the 1% and less for the other countries.
John
on 20 Feb 09“Hulu is what happens when the battle over the internet against greed is lost.”
Because really, it’s greedy for content providers to think they should make money with what they do. It would by like 37 Signals thinking people should pay them to use the products they create… oh wait, never mind.
Back to the topic, though: I think your products attract a specific kind of user who isn’t well served by most of your competitors (& they have customers who’d be poorly served by your products).
But I wonder if we’re confusing “following” with “watching.” I find it hard to believe that you don’t know what the general landscape of providers is in the niches where you have products… markets change, and I’d think you would want to know if someone emerged who served the 37 Signals customer as well as you do – or if a new group of customers emerged that fit into your product philosophy and could be served well & profitably (or is that greedily? ) by something you’d offer.
Jon Gretar
on 20 Feb 09JF: Cool. Thanks. SvN seems unusally high for a tech related blog in US usage. Sorry about the off topic discussion. :) It’s just that Hulu is the internet front of all that is wrong with the entertainment industry. iTMS is another. New relics of the old world.
Jon Gretar
on 20 Feb 09@John: “Because really, it’s greedy for content providers to think they should make money with what they do. It would by like 37 Signals thinking people should pay them to use the products they create.”
Does 37 Signals fix the price in each country? Take iTMS for example. There can be a 200% difference on prices between countries. The extra cost is none existant so it’s just done to make someone pay more than others. Do you think iTMS songs should be more expensive in NY than in Reno soly because of the difference in average wages?
Phil
on 20 Feb 09Hulu regions aside, I for one saw the Conan Clip, and I have to say: God. It’s good to laugh.
Christian
on 20 Feb 09If you want to use hulu outside the US you could use HotSpot Shield. It creates a vpn and you get a american IP so you can watch hulu.
Peter
on 20 Feb 09@Neil Kelty: No, but why not use an alternate source that everyone can enjoy.
@Everyone: Sorry, didn’t intend to derail.
John
on 20 Feb 09I don’t know what 37 Signals does outside the US, but lots of things are priced differently in different countries, especially when the seller charges in local currency.
I think getting mad at Hulu is kind of silly, though; the reason it’s hard to offer content cross-borders has to do with all kinds of existing restrictions: for example, the contracts and union agreements of actors, writers, and craft staff that set payment based on distribution.
I’m sure Hulu would love to offer content globally and run ads & make money all over the world with their service. But this is an old industry working through a lot of rather complex details that affect the livelihood of the people who create what you’re watching, so it’s not surprise that it takes time to get it all sorted out. (Look how long it took Apple to get to offering more DRM-free music, even after publicly announcing that they wanted to do it and chastising their partners about it.) And Hulu has said that it’s their goal to offer content worldwide (no surprise, that’s a profitable enterprise).
I think national borders on content will fade, though; it’s inevitable, especially when people can use technology to break the controls. But attributing it to greed just seems silly and self-righteous.
Jon Gretar
on 20 Feb 09@John: Music and Video is pretty much the only thing priced differently on the internet. Software and services are exactly the same. When you deal with solid things that need to be imported there is of course difference but that does not come from the manufacturer but the importer because of extra cost.
The strange thing is that this is only for digital version of the same content. I am free to buy CDs and books from amazon.com and pay the same price as you (plus some tiny shipping cost). But as soon as I buy the same book or CD on amazon.com in digital form suddenly I am asking for so much and I am in some way unfair to think that I should be able to get it.
What I’m saying is that even though you think borders will fade in the digital world the fact is that currently the borders are higher in the digital world than before. What had previously been thought really shady business practices in the real world is considered acceptable in the digital.
So I’m tecnically not asking for things to change. I’m more asking for them not to change to the worse.
ML
on 20 Feb 0937 Signals doesn’t, I believe, steal away “MS Projects People”… they take the 37 Signals People who happen to have been using Projects because they hadn’t been exposed to the 37 Signals Experience.
Don’t forget about nonconsumers. People who never used any project management software at all before Basecamp. That’s a huge chunk of the people who use our products. Sometimes ignoring the competition can help you appeal to this crowd too. More on 37signals and nonconsumption.
Mauricio Gomes
on 20 Feb 09We built what we needed. What we needed had nothing to do with Microsoft’s decisions or any other software vendor’s decisions.
Just as Apple didn’t invent the mobile phone, 37signals didn’t invent project management software. You must have at least at some point looked at other competitors and realized that their solution to the project management problem wasn’t very useful to you.
You may have never asked “what do they have that we must also have” but you must have at one point wondered: “what do they have that I definitely do not want.”
Michael
on 20 Feb 09Hulu is co-owned by NBC and Fox.
John
on 20 Feb 09I think it’s hard to argue that restrictions are getting worse. You couldn’t get most of the content on Hulu at ALL online, anywhere. Now you get it free in the US. At some point, the model will evolve to broaden that. I don’t think this is exactly backward motion.
The analogy to buying a CD from a foreign Amazon shop is flawed; you cannot buy that CD at the same price from your domestic shop. What you are doing is order by mail from an overseas merchant, and it’s not unlike getting on a plane, walking into a store, and buying something there.
Market forces will tend to equalize these things; for example, the fact than anybody in the US can pop over to amazon.co.uk and buy a British CD means that the price a US merchant can charge for the import is now limited. (Although I have found myself opting to buy things from Amazon UK because the price – even factoring in shipping and currency conversion – was lower than the very same item as an import from Amazon US.)
My point isn’t that this is all good or desirable, just that saying it’s “greed” is a bit silly; it’s pre-Internet business models catching up, which takes time.
Eric Nelson
on 20 Feb 09Great advice for product development and construction…. not so much for building a sales strategy.
When it comes to actually pricing your product, you still have to know what your competitors are offering, and their particular ROI. Then it all gets back to your strengths.
Anonymous Coward
on 20 Feb 09@John: No the Amazon example is not flawed. It was technically an example not an analogy. I can buy products from the US no problem. Like I can buy that CD from Amazon.com. Why is it unreasonable for me to go to that same amazon.com website and order a digital version of the very same thing? Now suddenly I’m denied access to the store because of my location. Nobody even thinks about putting that restriction on software, books or any other products that can exist both digitally and in hardcopy.
This is a new restriction that only exists for digital audio and video. This is not an old restriction from old business trickling into the digital age but it’s a completely new restriction added to further build up the price wall so that you can no longer go and buy things cheaper in other countries. The “real life” analogy of this would be if the US record stores required a US passport if you wish to walk in there and buy the products.
So now we are going backwards. Just like you said in your example then you can go and buy that UK band’s CD on amazon.co.uk and get it cheaper than from amazon.com. Thus making sure the prices are ok. What is happening with digital music and video is that they are bulding up a wall and stopping the ability of individuals to purchase these things from overseas. Thus they can now put any price they want knowing you have no ability to go elsewhere to get a better price. Thus I call it “greed”.
Happy
on 20 Feb 09@Jon: “Do you think iTMS songs should be more expensive in NY than in Reno soly because of the difference in average wages?”
A: Yes. Not exactly because of difference in average wages, but because of differences in what people are willing to pay. Road tolls should be higher during rush hour. Software should be cheaper for students. Software licenses per person should be cheaper for 100 users than for 40 users. Matinee shows should be cheaper than evening shows. Entertainment should be cheaper in Fargo, ND than NYC, NY.
But, the point’s a little moot because luckily we, as Consumers, have the power to decide for ourselves if the offered price is worth it or not. My simple answer to the problem would be: I’m not buying. If it’s an unsustainable practice, competitors will come in and offer their content in ways of your liking. If it’s sustainable, competitors will follow course. It’s up to you, the purchaser, to send the message on if it’s sustainable or not. After all, we’re talking about the most discretionary thing of all: entertainment spending.
John
on 20 Feb 09I’m not going to bore everyone by pointing out that sale of creative works is governed by various legal agreements which generally are country specific, and so on. I’ll just point out that you’re making a logical leap when assign a motive (“greed”) to a business that has stated that they are eager to offer their content abroad.
The reason that the physical example is a bad one is that the realities of physical distribution mostly took care of this issue; even when I sit here in Texas and buy a CD from Amazon UK, a UK merchant is selling a UK product and conducting the transaction in UK currency. There’s enough friction in the process that people don’t do it often. Digital distribution changes that.
I think it’s funny to ascribe “greed” to a company that has failed to provide you with free content fast enough while making plans to do just that. How, exactly, do they profit from not offering the content outside the US? Mostly by not getting sued by the content owners. Outrageous of them!
(Doesn’t the BBC have a media player that only works in the UK?)
Jon Gretar
on 21 Feb 09@Happy: One flaw in your point. There is no possibility of competitors. This is all in exclusive deals. So like here there is just one importer of almost all music. So if you want to compete in importing you will have to compete with no-name brands.
But what I am saying is that this seems to be getting worse each year with the digital age. Not better. Communications made the world smaller. Now IP industries are trying to make it larger than ever.
@John: These legal agreements should not apply here just like they don’t apply with hard copies. In every legal way this is exactly the same. I’m buying goods from a US store using US dollars.
I don’t want the content free. I’m not whining because I have to pay for things. Firstly Hulu is ad sponsored so it’s not exactly giving it away.
But I am totally against the new idea of splitting up the internet. Because that is what is happening. IP checking was unknown a couple of years ago but now it seems everywhere. I just wish to be a part of the digital revolution. But the digital revolution is being slowed down to incorporate price control into it. And with that smaller countries are simply being skipped over and not included in it.
This micro management is everywhere now. And just got topped by Apple with iPhone. I find this to be ridicilus. What’s next? Sony starts publishing CDs you can only listen to in Sony hardware? I’m just amazed that I’m the only one who sees this as a dangerous trend. IP owners have utterly gone bonkars in this century. You may not care at the moment because at the moment you benefit from it. Small change in the exchange rate (and that might happen any day) and you will feel the same way as me. :)
But…..........
Sorry about the rant. It really had nothing to do with my original point this exhange of ours. Which was a one line cursing over that bloggers have recently started using Hulu when other things are still available. It’s a bit silly if you want more readers.
:)
Ryan
on 21 Feb 09Good grief there’s a lot of whining going on here.
Heath Huffman
on 21 Feb 09I know exactly what your talking about… I have a list of ToDo’s for our product and I pretty much just keep producing what our clients and customers seem to be asking for. I hardly ever look at our competitors. But…. I would argue that I do look at them every once in a while, and I think it’s a good thing. Sometimes our competitors have already done something we are thinking about doing… and we can analyze what they have and come up with a better way of doing it ourselves. Plus, as much as I hate to admit it, sometimes they have a better way of doing things than us, so it shows us an opportunity for improvement.
I think that the point your trying to bring is that it can be overwhelming if all you do is worry about your competitors instead of focusing on what you feel are the important things that need to be done… and to that end you are correct.
Julian
on 21 Feb 09This is the typical “We are great and the best ever and we do it so and so” post.
Not everyone does always have success. If you don’t have success with something, your product most likely does not compete very well. How can you take part in the competition? Well, you look at your competition!
There is no point in sticking your head only in your own things if you want to stay on top and you are not super lucky all the time like 37signals seems to be.
colin
on 21 Feb 09Did you guys write this knowing conan’s show was ending? Or is that just a weird coincidence.
Rahul
on 22 Feb 09Similarly, Nintendo’s visionary designer Shigeru Miyamoto responds to questions of “what do you think of game X” with “I don’t know, I don’t play other people’s games much”. And similarly to Basecamp’s large former nonconsumer audience, the Wii, designed by looking at what they felt a videogame console would need to make gaming more accessible, has also built up a nonconsumer audience of people who previously shied away from videogames.
I always felt it was inspiring to hear stories like that – of uniqueness and a stubborn resolve to do what you believe is best – so it’s nice to more such stories. Thanks!
Rob
on 22 Feb 09Surely “fresh” is partly defined by what everyone else is doing?
So the logic of your argument doesn’t fully hold true.
John
on 22 Feb 09“These legal agreements should not apply here just like they don’t apply with hard copies. In every legal way this is exactly the same. “
Well, no, or we wouldn’t be having this conversation. Streaming online is legally not the same as buying a hardcopy. No comment on whether that’s GOOD, but it IS.
Troy
on 23 Feb 09Completely disagree. Companies do not operate in a vacuum and success is not absolute. This is a typical blindspot of a US based company…we’re the best and no one else matters.
As a competitive intelligence professional, I’ve learned the importance of watching one’s competitors and market shifts.
You want a examples of why it’s important to do this? Think about Sears in the 70’s (Walmart), GM in the 80’s (Toyota), Palm in the 90’s (Blackberry) and RIAA in the 00’s (P2P).
Wake up 37signals or you’ll be next…
Roderick van Domburg
on 23 Feb 09How does this relate to the “Pick a fight” advice in Getting Real? Agreed, benchmarking isn’t the way to the top, but neither is ignoring the competition.
Julian
on 23 Feb 09@Troy:
Well spoken. Just my point.
Adria Richards, ButYoureAGirl.com
on 24 Feb 09@Jason
Loving it! I’ve been a fan of 37Signals ever since I read, “Getting Real”. It confirmed for me that I could simply do things my way and then find people who liked my style. Once I stopped trying to “fit in” the the White Guy Technology World last year, I started blowing up!
I don’t like tracking “competitors”. It taints my creativity.
One thing I did do is reach out to IT consultants who had nice websites. I felt inspired and asked for their feedback and suggestions. I was able to get a fresh pair of eyes on my website and met some pretty interesting people in different states and countries. We now encourage each other to embrace the latest functionality and applications.
Each day I’m branding myself, my product, my honesty, integrity and my vision…It’s not something that can be copied.
Brian Burridge
on 24 Feb 09What it all comes down to is who knows best what your product should do? Your clients or your competition? Did Walmart design itself based on what Sears was or wasn’t doing or did Walmart build its empire based on what its customers wanted and needed?
Success for a business is based on satisfying your customers, not on how you position yourself in relation to your competition. Each company in each industry will have to decide how closely it watches the competition, but the point here is that focusing too much on your competitors when the focus should be on the needs of your own customers is not a recipe for success.
37signals built basecamp based on what it needed to accomplish internally and with its clients. It’s client responded positively with the experience and basecamp grew from there. It’s forward looking, toward the goal of pleasing your customers, instead of looking to the rear or side to see what everyone else is doing.
Troy
on 24 Feb 09@Brian…
I’m sorry, but you’re wrong. There are 5 forces that equally affect any and every industry – buyers, suppliers, competition, substitutes and potential entrants. Any one of them could dramatically change an industry.
Walmart surpassed and surprised Sears by focusing on the supplier element in the 5 forces. This allowed them to build a distribution chain providing everyday low prices instead of Sears’ seasonal sales. The fact that Sears didn’t see this as it was developing refutes everything you say about watching the competition.
Do yourself a favor and read “Competitive Strategy” by Michael Porter and “Business Blindspots” by Ben Gilad. Until then, please stop repeating the same old “corporate speak”.
Troy
on 24 Feb 09One more thing…Sometimes potential customers are the worst source of helping you design a product.
Go back about 10 years…what consumer would have said “give me a commodity that costs 5 to 8 times more than the competition in which I have to drive 20 to 30 minutes out of my way to stand in line an additional 10 to 15 minutes to get.”
Starbucks didn’t listen to focus groups and ultimately created a new market and became competition to completely unrelated businesses…a perfect example of “potential entrants.”
Brian Burridge
on 24 Feb 09@Troy I never said listen to focus groups. I hate focus groups. That’s the shallow version of “listening to customers” and as you said, doesn’t work (sat through far too many of them).
If you are married, listen to your wife, don’t “listen” to your wife. What she is saying she needs isn’t necessarily what she needs, and yet, what a fool you would be to look at what other husbands are giving their wives and copy them.
Find out what your spouse really needs and provide it.
Troy
on 24 Feb 09@Brian
Great response! You can tell you’re a very insightful business person. You got me thinking, does the 5 forces model work in a marriage? (I’m married by the way)
The answer is yes! There are “potential entrants” and “substitute products” that we as husbands must consider, in addition to the “competition”.
Think about it!
This discussion is closed.