tech-company, business-plan, business-modelI’m currently working at a tech startup trying to build a consumer facing, anti-X product. Much like how Reddit unseated Digg, Microsoft Office replaced Lotus 1-2-3, Facebook beat MySpace, we’re trying to build a competitor to X. X is a product that is largely regarded as a bully and unethical in practice, but has been around for over a decade, is widely used, and is still the go-to in its field.
Unseating a 800-pound gorilla is proving more difficult and slower than we had anticipated. We’ve looked at successful examples of this in the past. Digg to Reddit seems to be because the business not listening to its users, Lotus to Office because of complacency and a better product coming around, and the same for Facebook to MySpace.
What are some ways ways to build an anti-X product? Feature matching and then improving based on user input, as well as better design and usability, isn’t proving very fruitful. Taking the moral and transparent business practices route doesn’t seem to be enticing to users either.
This is very hard question (or rather questions).
It’s not enough to have a superior product in terms of features as you have noticed yourself.
With well established competitors you have to take into account the issue of transaction costs. These are the costs customers have to incur to make the switch. Not all of them are of monetary nature.
You mentioned that they’re on the market for over a decade. I don’t know whether Product X is for businesses or individuals but that’s a very long time to have whole infrastructure built upon their solutions. These are training and processes but also unwilingness to learn new tool (even if it’s easier or better or both), existing SLAs (service level agreements) with incumbent, etc.
One of the ways to overcome transactional costs is to educate potential users of benefits they can get from using your product over ‘theirs’. And show them that a learning curve isn’t steep or the product will save time.
Try to conduct a thought experiment: imagine that you run an organisation that extensively uses Microsoft Excel. Virtually anything is done in Excel workbooks starting from finance to HR to sales to CRM. Now some startup shows up and tells you that they have a better solution - all these workbooks can be consolidated into one package.
What would you do? Would you switch immediately or do an assessment to see what’s more viable to your organisation?
What would be a selling point for you to incur big costs in short term but save massively in long run?
How would you deal with all stakeholders? All these people that spent the last 10 years learning ins and outs of Excel?
Answering these hard questions will help you to develop right strategy how attack you competitor.
A straight answer to the question is an analysis of the market. This analysis should guide decision makers in choosing what to build and deliver. It may lead to a straight ersatz of an existing product (e.g. some Crocks clone), a related service that addresses unique user needs not addressed in incumbents’ offering (e.g. Indeed vs. Google search engines), or a radically different approach to a problem no one significant was aware of (e.g. real mobile internet starting with the iPhone).
What indicates if an anti-X product will be worth pursuing? I think this is a dangerous question, as it can mislead business owners, and distract from the real problem: Customers and revenue process.
X is not the primary problem. The problem is the market and its dynamics, especially whether it is growing over time. If the market is not growing, an “anti-X” product has little chance for significant success, mainly due to the transactional cost mentioned by @Maciej K. (I prefer the “switching cost” terminology). If the market is noticeably growing, there should be enough untapped customers to serve, even with a bare copy on an existing product (modulo IP). A third alternative is that the market can grow bigger, if served appropriately. One example is the smartphone market, barely growing until the advent of the iPhone. Here, we can argue that there was no “anti-X” product, though: The iPhone created a new category (if this is too stretched of an example, I can provide others: mini computers vs. mainframes, etc.). This last situation is called addressing “non-consumption markets” by some analysts.
In a given market, a company has to provide a solution to an actual issue faced by potential customers, whether these people are already aware (I want to do abc and need a tool) or not (a chatting app à la Skype? Who needs this What’s App?). Whether that solution ends up becoming an “anti-X” is a back thought or just a consequence.
To back these claims, I would like to point to the work of Christensen on disruptive innovation. His books such as the Innovator’s Dilemma or Disrupting Class give a lot of historical and concrete examples of (1) why “[f]eature matching and then improving based on user input, as well as better design and usability, isn’t proving very fruitful”, and (2) thought experiments similar to the one suggested by @Maciej K..
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