Competitive Environment

Launching a new start-up requires a lot of Strategy thinking. One of the key point is the study of the competitive landscape. Of course, you should look at any competitor/substitute, at their products, their marketing… but you should also give a broad look to the landscape : what will your start-up get into? Of course, there are many situation, but, in any case, there is competition, if not from direct competitors, from substitutes: even if you’re creating a brand new totally innovative web-service! Correct me if I’m wrong, but I’ve identified 2 main cases for internet.

Many small competitors, no “big player” : the market is in the “growth” phase (horizontal), pushed by the number of actors. Players are actually start-ups, mostly below 2 year old. I think this is the most difficult landscape. First, all the payer are lightweight, which means that they can react pretty easily and quick to the market; second, they are small, hence, not very visible; third, the market itself is unclear… it might very well happen that everyone is going straight into the wall! Some examples? the online video sharing 18 months ago : every single day you could find new services, with little or no comparative advantage… I could also mention blog platforms 4 years ago.
A few big competitors, and little or no small players : the market is still in the “growth” phase (vertical), but this time, it’s pulled by users. Big players became “brands” and are profitable (or about to), and a lot more risk-averse : they will tend to move slower than they used to. I’d rather move into this market. Search engines are in that stage, as well as webmails, or blogging platforms.

What do you think? what would be your pros and cons for each phase?