Chris mentions that when he thought about the founder’s idea for Dropbox his concern was how busy the space already was.
I’d have to say in all honesty if I were offered I probably would have passed. 2005-6 saw about 100 consumer backup/storage/file sharing companies raise funding. I remember after Drew left my office I looked at some article on RWW or Mashable or someplace that listed page after page of consumer backup/storage/file sharing companies. It just seemed like an insane idea to start another one and it seemed like Drew’s only thesis was that his product would work better.
Fast forward and Dropbox is on it’s way to $100M in revenue and is just killing it. So, if there really were so many competitors then why did Dropbox succeed and what does that mean for founders considering entering crowded markets?
When I think about startup success and failure, it is all about people. You can list issues with product, goto market, etc, but when you drill down to the root cause it’s people. Retail success is about location, location, location. Startup success is about people, people, people.
Truly exceptional people can enter crowded markets and win. When Google entered search it was already an established space with Yahoo!, Lycos, Geocities and others. As we all know now, Google rules search and of all the companies that used to rule search pretty much only Yahoo! is left.
Now, Google is one thing. But what about brand new startups? How important should competition be in your thinking? I think that you should be aware of your competition but it should not be a primary focus. You should not attempt to react to moves by your competition. You should not sweat a major release. You just need to keep your head down, implement your roadmap, delight your customers and move closer to your vision each and every day.
What if you have no competition? If this is *really* true, then you are either not defining your market properly or you need to be doing something else. Anything worth doing will have multiple people going after it either in direct competition to you or taking a different approach.
So, that’s my take anyway. You should spend no more than 5% of your time thinking about your competition. Spend the other 95% making your own vision happen.