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How Startups Can Use Their Competitors (Instead of Just Avoiding Them) – ReadWrite



How Startups Can Use Their Competitors (Instead of Just Avoiding Them) - ReadWrite

In the world of startup entrepreneurship, competition is a major problem. If there’s another business offering a product like yours — to a market like yours — it’s treated as an existential threat, and rightly so. If a competent competitor is capable of offering superior exchanges for consumers, they’re going to leave your company for theirs (no matter how loyal your customers may seem).

Accordingly, a major strategic element for any startup is figuring out a way to deal with competition. For the most part, this involves a series of strategies that can be broadly classified as self-improvement or avoidance.

In self-improvement strategies, a startup seeks to improve itself such that a competitor can no longer contend with it. For example, you may attempt to cut your prices dramatically so your product is more objectively favored by the logic-driven customers you share. You might also improve customer service, expand your offerings, or make things more convenient for your customers.

In avoidance strategies, a startup attempts to minimize competition altogether. For example, you might tap into marketing strategies that your competitor has never considered or target a completely different niche to avoid direct conflict.

In rarer cases, a startup may seek to undermine or attack a competitor in a sabotage-style attack. But aside from being borderline unethical, these tactics are often nowhere near as cost-efficient as straightforward improvement or avoidance strategies.

But what if there was another option? What if you could use your competition as a source of development and improvement?

The Premise

Let’s start with an outline of the basic premise.

Your competitors are powerful forces in the industry. As an illustrative metaphor, let’s consider them a powerful fighter in the ring. Traditional approaches encourage you, another fighter in the ring, to confront them head on, train to improve yourself as a fighter, or increase your agility so you can avoid their attacks.

But there are other ways to approach this situation, which derive their power from the strength of your opponent. For starters, you can use the opposing fighter’s momentum and strength against them; the “bigger they are, the harder they fall” style approach. You can also work together with your competing fighter against a bigger, even more powerful enemy.

A Merger

One straightforward, if rarely appealing, option here is a merger. If you and your competitor have a similar business model and you’ve split the market down the middle, why not join together and multiply both your strengths?

Mergers aren’t always possible, nor are they always preferable. In some cases, joining together can make you much more powerful than the sum of your parts. In some cases, a merger is the first step on the fast track to collapse.

And of course, there’s always the possibility that your competitor won’t want to consider a merger in the first place. But it’s worth considering – especially if you’re tired of trying to make the conventional paths of competition work in your favor.

Research and Understanding

Before you even launch your business, you should be using your competitors as a source of research, information and understanding. Competitors are your biggest lenses into the world of your industry, and they have much to tell you about how you should be structuring and supporting your business.

For example, consider:

  • Satisfied customers. How many customers does this company have? Are they satisfied? Why are they satisfied? What is it that this company does that makes people keep coming back to them? You can use this information to refine your own products, services, and customer offerings.
  • Unsatisfied customers. Even more importantly, why does this company have unsatisfied customers? When people leave this brand, what is their primary motivation? Are they looking for lower prices? Are they unhappy with the level of customer service? You can use this information to develop a better offer for your shared audience.
  • Sources of innovation. What are the biggest areas of innovation for this competitor? Where does their product or service out-compete other businesses in this industry? What are their areas of specialty?
  • Weaknesses. What are the biggest weaknesses of this competitor? Is it possible to exploit these weaknesses in the course of your business’s development?

Brand Equity and Brand Jacking

Let’s say you have a competitor who’s already well-established in the industry. They have 10 times as many customers as you have and they’re practically a household name. What if you could use the power of their existing brand name for your own benefit?

Brand names have power, which we’ll call “equity.” And that equity can be tapped into. Consider brand jacking, a strategy that relies on your ability to derive power from someone else’s brand.

For example, by using the power of search engine optimization (SEO), you can write content optimized for brand-specific keywords belonging to your competitors. When a potential customer searches for the brand, they’ll likely see your competitor in the top position in search engine results pages (SERPs).

But in the second position, they may see an article you’ve written titled something like, “The Top X Alternatives to [Brand Name].” It’s an easy way to leech traffic from a competitor, using their own brand equity against them.

You can also practice this strategy by utilizing pay per click (PPC) ads based on your competitors’ brand name keywords and phrases.

Lifting the Industry

Oftentimes, good PR and marketing isn’t just about improving the reputation or visibility of your company – it’s also about improving the reputation and visibility of your entire industry.

If this is the case, consider looking for opportunities where you and your competitors will mutually benefit (and take advantage of them). For example, if a competitor announces expansion into new territory, that could mean increased exposure for the entire industry.

Even if the expansion is likely a threat to your brand, it also presents new opportunities – which you can find and tap into if you’re willing to lean into the new publicity.

Complementary Offerings

There may be areas where you and your competitor directly compete, but there may also be areas where you have complementary offerings. If this is the case, you may be able to work together to provide your mutual customers with a more comprehensive, singular experience.

For example, you can use your competitor as a third-party vendor for a service you may be unable to provide on your own. It’s a risky maneuver if you stand to lose the customer to a competitive offer, but you may also be able to arrange a white label provision of service to minimize this possibility.

Collaboration and Cross-Promotion

Have you ever considered working directly with your competitor on a new piece of content or a new marketing campaign? By combining your data sets, your resources, and your pool of experts, you can likely create something more interesting and more valuable than either of you could by yourselves.

Consider working together on an industry whitepaper, an eBook, or even a podcast or video series designed to support the industry. It’s the perfect opportunity for shared cross-promotion.

Referrals and Trading

Referrals have enormous power to grow your business. But prior customers don’t have to be your only source of referrals. You could set up a dynamic cross-referral program with a competitor, trading leads and referrals on an as-warranted basis; for example, you could forward excess customers to your competitor if your backlog begins to get unwieldy. In exchange, they could pay you a referral fee and/or send you referrals when the tides turn.

Your competition is always going to be a threat – but it doesn’t have to be a threat exclusively. In addition to adjusting your business to minimize the peril of direct competition and improving your business overall through innovation and development, consider making use of your top competitors. It’s a counter-intuitive strategy, but can be quite a powerful one if used properly.

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Timothy Carter

Chief Revenue Officer

Timothy Carter is the Chief Revenue Officer of the Seattle digital marketing agency, & He has spent more than 20 years in the world of SEO and digital marketing leading, building and scaling sales operations, helping companies increase revenue efficiency and drive growth from websites and sales teams. When he’s not working, Tim enjoys playing a few rounds of disc golf, running, and spending time with his wife and family on the beach…preferably in Hawaii with a cup of Kona coffee.


Fintech Kennek raises $12.5M seed round to digitize lending



Google eyed for $2 billion Anthropic deal after major Amazon play

London-based fintech startup Kennek has raised $12.5 million in seed funding to expand its lending operating system.

According to an Oct. 10 report, the round was led by HV Capital and included participation from Dutch Founders Fund, AlbionVC, FFVC, Plug & Play Ventures, and Syndicate One. Kennek offers software-as-a-service tools to help non-bank lenders streamline their operations using open banking, open finance, and payments.

The platform aims to automate time-consuming manual tasks and consolidate fragmented data to simplify lending. Xavier De Pauw, founder of Kennek said:

“Until kennek, lenders had to devote countless hours to menial operational tasks and deal with jumbled and hard-coded data – which makes every other part of lending a headache. As former lenders ourselves, we lived and breathed these frustrations, and built kennek to make them a thing of the past.”

The company said the latest funding round was oversubscribed and closed quickly despite the challenging fundraising environment. The new capital will be used to expand Kennek’s engineering team and strengthen its market position in the UK while exploring expansion into other European markets. Barbod Namini, Partner at lead investor HV Capital, commented on the investment:

“Kennek has developed an ambitious and genuinely unique proposition which we think can be the foundation of the entire alternative lending space. […] It is a complicated market and a solution that brings together all information and stakeholders onto a single platform is highly compelling for both lenders & the ecosystem as a whole.”

The fintech lending space has grown rapidly in recent years, but many lenders still rely on legacy systems and manual processes that limit efficiency and scalability. Kennek aims to leverage open banking and data integration to provide lenders with a more streamlined, automated lending experience.

The seed funding will allow the London-based startup to continue developing its platform and expanding its team to meet demand from non-bank lenders looking to digitize operations. Kennek’s focus on the UK and Europe also comes amid rising adoption of open banking and open finance in the regions.

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Radek Zielinski

Radek Zielinski is an experienced technology and financial journalist with a passion for cybersecurity and futurology.

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Fortune 500’s race for generative AI breakthroughs



Deanna Ritchie

As excitement around generative AI grows, Fortune 500 companies, including Goldman Sachs, are carefully examining the possible applications of this technology. A recent survey of U.S. executives indicated that 60% believe generative AI will substantially impact their businesses in the long term. However, they anticipate a one to two-year timeframe before implementing their initial solutions. This optimism stems from the potential of generative AI to revolutionize various aspects of businesses, from enhancing customer experiences to optimizing internal processes. In the short term, companies will likely focus on pilot projects and experimentation, gradually integrating generative AI into their operations as they witness its positive influence on efficiency and profitability.

Goldman Sachs’ Cautious Approach to Implementing Generative AI

In a recent interview, Goldman Sachs CIO Marco Argenti revealed that the firm has not yet implemented any generative AI use cases. Instead, the company focuses on experimentation and setting high standards before adopting the technology. Argenti recognized the desire for outcomes in areas like developer and operational efficiency but emphasized ensuring precision before putting experimental AI use cases into production.

According to Argenti, striking the right balance between driving innovation and maintaining accuracy is crucial for successfully integrating generative AI within the firm. Goldman Sachs intends to continue exploring this emerging technology’s potential benefits and applications while diligently assessing risks to ensure it meets the company’s stringent quality standards.

One possible application for Goldman Sachs is in software development, where the company has observed a 20-40% productivity increase during its trials. The goal is for 1,000 developers to utilize generative AI tools by year’s end. However, Argenti emphasized that a well-defined expectation of return on investment is necessary before fully integrating generative AI into production.

To achieve this, the company plans to implement a systematic and strategic approach to adopting generative AI, ensuring that it complements and enhances the skills of its developers. Additionally, Goldman Sachs intends to evaluate the long-term impact of generative AI on their software development processes and the overall quality of the applications being developed.

Goldman Sachs’ approach to AI implementation goes beyond merely executing models. The firm has created a platform encompassing technical, legal, and compliance assessments to filter out improper content and keep track of all interactions. This comprehensive system ensures seamless integration of artificial intelligence in operations while adhering to regulatory standards and maintaining client confidentiality. Moreover, the platform continuously improves and adapts its algorithms, allowing Goldman Sachs to stay at the forefront of technology and offer its clients the most efficient and secure services.

Featured Image Credit: Photo by Google DeepMind; Pexels; Thank you!

Deanna Ritchie

Managing Editor at ReadWrite

Deanna is the Managing Editor at ReadWrite. Previously she worked as the Editor in Chief for Startup Grind and has over 20+ years of experience in content management and content development.

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UK seizes web3 opportunity simplifying crypto regulations



Deanna Ritchie

As Web3 companies increasingly consider leaving the United States due to regulatory ambiguity, the United Kingdom must simplify its cryptocurrency regulations to attract these businesses. The conservative think tank Policy Exchange recently released a report detailing ten suggestions for improving Web3 regulation in the country. Among the recommendations are reducing liability for token holders in decentralized autonomous organizations (DAOs) and encouraging the Financial Conduct Authority (FCA) to adopt alternative Know Your Customer (KYC) methodologies, such as digital identities and blockchain analytics tools. These suggestions aim to position the UK as a hub for Web3 innovation and attract blockchain-based businesses looking for a more conducive regulatory environment.

Streamlining Cryptocurrency Regulations for Innovation

To make it easier for emerging Web3 companies to navigate existing legal frameworks and contribute to the UK’s digital economy growth, the government must streamline cryptocurrency regulations and adopt forward-looking approaches. By making the regulatory landscape clear and straightforward, the UK can create an environment that fosters innovation, growth, and competitiveness in the global fintech industry.

The Policy Exchange report also recommends not weakening self-hosted wallets or treating proof-of-stake (PoS) services as financial services. This approach aims to protect the fundamental principles of decentralization and user autonomy while strongly emphasizing security and regulatory compliance. By doing so, the UK can nurture an environment that encourages innovation and the continued growth of blockchain technology.

Despite recent strict measures by UK authorities, such as His Majesty’s Treasury and the FCA, toward the digital assets sector, the proposed changes in the Policy Exchange report strive to make the UK a more attractive location for Web3 enterprises. By adopting these suggestions, the UK can demonstrate its commitment to fostering innovation in the rapidly evolving blockchain and cryptocurrency industries while ensuring a robust and transparent regulatory environment.

The ongoing uncertainty surrounding cryptocurrency regulations in various countries has prompted Web3 companies to explore alternative jurisdictions with more precise legal frameworks. As the United States grapples with regulatory ambiguity, the United Kingdom can position itself as a hub for Web3 innovation by simplifying and streamlining its cryptocurrency regulations.

Featured Image Credit: Photo by Jonathan Borba; Pexels; Thank you!

Deanna Ritchie

Managing Editor at ReadWrite

Deanna is the Managing Editor at ReadWrite. Previously she worked as the Editor in Chief for Startup Grind and has over 20+ years of experience in content management and content development.

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