Play Stupid Games, Win Stupid Prizes

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Competition will blind you to greater games. You’re one step away from a better market.


Businesses that seem like they’re in direct competition really aren’t

Nivi: When you’re being authentic, you don’t mind competition that much. It pisses you off and inspires some fear, jealousy and other emotions. But you don’t really mind because you’re oriented towards the goal and the mission. Worst-case, you might get some ideas from them. And often there are ways to work with the competition in a positive way that ends up increasing the size of the market for you.

Naval: It depends on the nature of the business. The best Silicon Valley tech industry businesses tend to be winner-take-all. When you see competition, it can make you fly into a rage. Because it really does endanger everything you’ve built.

If I’m opening a restaurant and a more interesting version of the same restaurant opens in a different town, that’s fantastic. I’m going to copy what’s working and drop what’s not working. So it depends on the nature of the business.

Often, businesses that seem to be in direct competition really aren’t. They end up adjacent or slightly different. You’re one step away from a completely different business, and sometimes you need to take that step. You’re not going to take it if you’re busy fighting over a booby prize.

You’re playing a stupid game. You’re going to win a stupid prize. It’s not obvious right now because you’re blinded by competition. But three years from now, it’ll be obvious.

My first company got caught in the wrong game

One of my first startups was Epinions, an online product review site that was independent of Amazon. That space eventually turned into TripAdvisor and Yelp, which is where we should have gone.

We should have done more local reviews. A review of a scarce item like a local restaurant is more valuable than one of an item like a camera that has 1,000 reviews on Amazon.

Before we could get there, we got caught up in the comparison-shopping game. We merged with DealTime and competed with a bunch of price-comparison engines—mySimon, PriceGrabber, NexTag and Bizrate, which became Shopzilla. We were caught in fierce competition with each other.

That whole space went to zero because Amazon won e-tail completely. There was no need for price comparison. Everyone just went to Amazon.

We got the booby prize because we were caught up in competition with a bunch of our peers. We should have been looking at what the consumer really wanted and being authentic to ourselves, which was reviews, not price comparison. We should have gone further into esoteric items where customers had less data and wanted reviews more badly.

If we stayed authentic to ourselves, we would have done better.

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