Why I Never Worry About Competition
Why I Never Worry About Competition
And what it feels like being in the middle of one of the most competitive markets
Throughout my ~5 year entrepreneurial journey running Monolith, I've experienced some pretty wild things:
Competitors have attempted to pirate my staff, some have succeeded and some have failed.
Account Managers from all sorts of other agencies joining my webinars, and I’ve noticed our methods started popping up across different accounts
Other Founders have started copying our organization structure. They’re still pretty bad at it, but for the most part, we’re still the only company who can pull off a Growth Manager centric organization.
But guess what?
I never really cared, and I still don’t…
… even when employees and well-meaning relatives nag me about it.
And even then, in January 2023, I launched a new Generative AI product in the marketing space, called Mai, embracing a new wide field of wild, well-funded competition.
So why don’t I care?
Because competition has never mattered.
I’ve learned from my corporate days and in entrepreneurship that only 4 things truly matter: Market, Technology, Concentration, and Unit Economics.
Let me explain each of these in detail and share some examples from my own experience.
1. Market: You Must Serve the Market in the Best Way Possible
The market is king.
No matter how many competitors try to copy your strategies or tactics, if you consistently serve the market in a superior and in a more distinctive way, you’ll do fine.
A common error I’ve seen people do is that they try to evaluate their company’s ability to serve the market by comparing their offering vs their competitors…
… they’d perhaps make a comparison table and tally all what others provide and they try to one-up the other business.
And they all say the same thing in pitches, which is “we are a one-stop shop”.
Anytime I hear that from an agency, I know they’re dead-on-arrival. It’s the laziest piece of thinking I’ve ever heard.
The problem with that thinking is that when you do start serving the market, you don’t really know if your people are actually solving customers’ problems or if you’re just fulfilling a random checklist.
Oftentimes, I hear new customers say that “our past agency did X thing”; but when we audit the marketing activities, there’s always a lot of things that are missing, or a lot of activities that don’t really matter (like tracking reach).
On a marketing agency point of view, it’s more important to get customers to express what their main problems are, then look to personalize your solution in the best way possible.
For example:
Most agencies think shallowly and think that awareness is the problem.
Less shallow agencies know that awareness is not really the problem, and it’s more about revenue and marketing efficiency.
The least shallow agencies know that is not enough for retailers with principals across the world, and there’s also brand compliance, budget allocation requirements, DTI lead times, and the need for an audit trail.
So the main insight here is that you need to solve market problems in a deep way, not in a broad & shallow way. You must be the guy who can cure marketing disease, not the guy who slaps on a band-aids, checks the box, and calls it a day.
2. Technology: You Must Adapt to Technological Inflection Points
In his book "Only the Paranoid Survive," Andy Grove emphasizes the importance of adapting to major technological shifts. I couldn't agree more. To understand his point, let’s grab a page off his book:
“A strategic inflection point is a time in the life of a business when its fundamentals are about to change. The change can mean an opportunity to rise to new heights. But it may just as likely signal the beginning of the end.” - Andy Grove
There is one recent example of this in the marketing space:
2010-2020: The Algorithmic Feed
When Facebook pioneered the algorithmic feed, two major concepts emerged: a) engagement & conversions now became a viable target for advertisers and b) content creators were born
Upworthy, Buzzfeed, and Tasty were the early winners when it comes to optimizing engagement. The idea of “clickbait” was born.
Elections were influenced by masses of microinfluencers. The idea of “movements” was born.
The early adopters of the algorithmic feed created what are now thriving ecommerce stores. The low demand yet high supply created a period of very low CPMs for a while, until the pandemic happened and everyone hopped on the digital train.
Bottom line: if you’re able to find inefficiencies in algorithmic feeds, whether its in Facebook, Instagram, Youtube, or Tiktok, you will benefit from cheap CPMs and strong cost per conversions.
Starting from 2020, I’d argue that the next inflection point is Generative AI, started by Google’s Transformer Architecture, which is then productized by OpenAI in the form of ChatGPT. I’ll touch more on this in a future post.
Let’s now look at the 3rd thing that matters more than competition…
3. Concentration: You Must Limit Customer and Vendor Concentration
If most of your business is from one customer (>15% of your revenue) or controlled by one vendor (>15% of your inventory/supply), then your business is on shaky ground.
I’ve seen many agencies or companies in general get too proud when they get that “one large client” or that “key partner”. Oftentimes, I see these companies fail in about 3-5 years.
The reasons are always the same:
They ran out of money (because they got cornered into bad payment terms)
Abrupt change in contract (because decision makers in corporations change, and strategy & budget allocations change as well)
Vendors vastly increased in price and they are locked in
While I don’t discourage folks to take on these engagements if it makes sense for them, I strongly encourage limiting customer & vendor concentration as quickly possible.
Ideally, they should control less than 15% of your revenue or 15% of your inventory or supply.
Imagine the worst case scenario, if a customer controls 50% of your revenue, if they suddenly stop working with you (and you can’t even pay for lawyers to go to court if you want to), then what’s going to happen to your operations & staff? Scary vibes.
Keep concentration low. This is especially true for service companies.
4. Economics: You Must Manage Unit Economics
Tracking margins on a month-to-month or even week-to-week basis is crucial for maintaining a healthy business.
When I started Monolith in 2017, money was truly tight, so I tracked our numbers on a week-to-week basis.
This meant I tracked things such as:
Cash Profit Margin
Software cost as a percentage of revenue
Contractor cost as a percentage of revenue
Marketing cost as a percentage of revenue
Employee cost as a percentage of revenue
You’ll need to have percentage caps across the board, try to reframe all costs as a variable cost, and that’s how you get very lean and nimble.
As our financial situation improved, I transitioned to monthly and eventually quarterly tracking.
By keeping a close eye on our unit economics, we've been able to identify areas for improvement and make data-driven decisions that have contributed to our overall success.
Competition? Who? That Dork? Ok. Give me 1 minute - I have do something for a client, yeah?
Now, let's circle back to the issue of competition.
Why don't I worry about competitors copying my strategies or tactics?
Because if you play your cards right, no one else can't replicate your 1) unique combination of market understanding, 2) technological adaptability, 3) concentration management, and 4) economic discipline that will ultimately drive your progress.
And if you want to be truly distinctive, have a differentiated culture & differentiated organization structure.
Competitors may try to copy you, but they'll will fail as they will inevitably copy someone else, fail at that too, and get confused what to do, then get FOMO’d into copying someone else, then gives up, then they buy some random NFT.
In summary, instead of worrying about competition, focus on mastering these four key factors: Market, Technology, Concentration, and Economics.
By doing so, you'll build a strong foundation for your business that will allow you to weather any competitive storm and come out on top.
Key points, ideas, snarky comments, and the “soul” of this article was written by Kenn. Draft made by a developer version of Mai, a Generative AI writer. Help your customers better & accelerate your marketing productivity using Mai. Free plan available: https://www.maiwriter.com/
Author Background: Kenn Costales is the Founder of Monolith Growth Ventures. Brands include Monolith Growth Consulting, a performance marketing agency, and Mai, a generative ai software for in-house marketing teams & agencies. Forbes 30 Under 30 2019.