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“Google is my only competitor!”

As an angel investor, I am always in a mode of “being pitched” and “being a source of an idea/an investment” for years. It is so natural though; start-ups frequently need investment and/or investor perspective.

It is a multichannel process: some reach directly to me via social media or peer introduction, we meet some in organizations I have been invited, or sometimes I reach them to talk. Probably, I listened or reviewed more than 3000 start-ups so far. And unfortunately, most of them failed.

People who follow the literacy of the entrepreneurship ecosystem mostly read success stories. Whereas people who follow the statistics instead know that stories of failure are vast in number. My observation is also the same.

One of the precise indicators of failure is having the following or similar answers after asking founders who their competitors are:

· “We have no competitors”

· “Our only competitor is Google!” (Or Uber, or, or Tesla (!))

(Spoiler: Both answers guarantee that the start-up requesting investment will fail.)

There are only two options if you heard the first answer unless the founders you have faced invented a product/service beyond the era such as the airplane, internet, the radio, penicillin, I-Phone, fire, writing, etc.: either they are unaware of the surrounding World and they even do not use Google search bar or there are not any competitors because they produce something which does not have a demand and a market.

Most probably, the founders who gave the second answer have not conducted research such as the first group and are unaware of the surrounding World. Also, they gathered some misleading information (in fact, not information but biases), and most likely they will not change their minds. Besides, the chances are that they bear a self-confidence which is not being fueled by knowledge or experience and misguide them.

I must emphasize this here: I do not mean founders with big ideas having great preparation to achieve. They are not the ones who will fail. Founders that will fail are the ones who lack the knowledge, the team, and the preparation; the ones who do not even need research because they do not wonder if they have any competitors; the ones who think they can beat global giants with the tiny investment from an angel investor (or who think that they can find investments worth millions of TLs at the idea stage and without any traction).

In another often situation, founders hesitate to name their competitors while pitching or talking to investors. and underrate them when heard about from other people. However, as an investor, I think the below when I learned about the competitors of my investee candidate:

· “The market is real and alive for this product/service so there are competitors.”

· “Probably they are solving a real customer problem.”

· “My investee candidate has the potential to grow inorganic by acquiring competitors”

· “If I want to exit from the investment like every other investor plans to do, there are potential acquirers for my investee.”

· “Competition can lead to rapid growth and rapid thriving of this company”

· “Founders are realistic, self-confident and have both feet on the ground”

Entrepreneurs must conduct deep research at the founding stage of their start-ups. Their products/services must meet a real customer problem and must have real competitors. This is the only way for their company to survive. Frankly, an analysis conducted by CB Insights and summarized by the below infographic is making everything clear. According to this analysis, the most common reason for start-up failure is “to lack market need” with a 42%; in other words,” being competitor-free (!)” or “having Google as the sole competitor (!)”. On the other hand, getting outcompeted is a failure reason for only 19% of the start-ups failed. So, let us fear the absence of the competitors, not their presence!

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