Competition
JC Newsletter #227
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We operate in an extremely competitive world. We cannot ignore it, but we have some points to guide us on how to approach this matter.
Observe competition through the customer lens
First of all, we must not be obsessed with the competition, though we need to understand it. I will elaborate on how to do that.
The right way to evaluate competitors is through a customer lens. We should be obsessed with our members and customers, understanding how we can provide them with what they want most.
Specifically, being obsessed with our members & customers’ problems will help us see early if a competitor is solving their problems better than we are. The biggest thing that matters about competition is if our customers are choosing or switching to a competitor over us.
It’s important to have a holistic view of customer problems. It’s also important to understand how customers make buying decisions.
No excuses!
Jack Welch (ex-GE CEO) shared this:
“We’re losing market share because our competitors are crazy, and they’re giving the product away.”
I heard that more than a hundred times in my career. Usually, it turned out to be BS.
The real truth was that a competitor had a better cost position or a strategic rationale for what it did.
It took me a while to gure out that I should have been asking, “What was wrong with us, not them?”
If we start losing deals, let’s find the root cause with extreme urgency, figure out why our solution is falling short of our customer needs, and fix it.
Let’s not blame others, let’s own it, let’s understand it, and let’s differentiate even more!
So, what do we need to focus on?
For our members, this means the best care and prevention, at the right time, at the best price, and in the right place. We are working on this,
For businesses, it’s about providing the most health services that optimize employee engagement, reduce absenteeism, and create happier employees, at the best possible price.
As long as we do this, we will succeed.
The competition metagame
At the same time, understanding the competition is necessary to see how we position ourselves against them, to better pitch our differences, our unique features, and our value.
Sometimes, understanding the competition can also inspire some ideas. We must always question ourselves. Let’s check everyone who is our competition. And don’t look for the bad. Look for the good.
But we should not rush to do exactly what the competition does, because often they are acting in ways that suit their context, which may differ from ours.
It's crucial to understand what they can and cannot do. What are our competitive advantages? What game can we play that they cannot, thanks to our unique strengths? How do we bring everything onto our own ground?
Adding Sun Tzu's principle from the Art of War: “You can be sure of succeeding in your attacks if you only attack places which are undefended.”
Another competitive advantage is mastering our cost structure better than the competition does with theirs.
Going into details, understanding everything, knowing where we can invest.
Verticalizing care more so that we can be more competitive in terms of price and achieve better margins, making us much stronger.
Create economies of scale.
Moving faster than the competition in providing customers what they want, when they want it, and where they want it, is the best way to win, as George Stalk Jr. said.
How they’ll react
Finally, we must not be naive. The competition will react. I love this quote from Tony Fadell, which I have often shared with the team:
Sony laughed at the iPod. Nokia laughed at the iPhone. Honeywell laughed at the Nest Learning Thermostat. At first.
But soon, as your disruptive product, process, or business model begins to gain steam with customers, your competitors will start to get worried.
When companies get angry they undercut your pricing, try to embarrass you with advertising, use negative press to undermine you, put in new agreements with sales channels to lock you out of the market.
And they might sue you. If they can’t innovate, they litigate.
I’ve seen the same thing many times at Expliseat, my first airline seat company. In the months we announced our first model, the competition promised a model of the same weight, between 4 and 5 kilos, claiming it would be released within the year, to deter customers from signing with us. They made this promise every year for over 10 years, and they still haven't released it. But it slowed our initial growth until the market understood the “lie”.
Concluding
Our job is to constantly widen the gap of innovation so it is impossible for them to even try to play catch up, and members and customers will benefit.
Some good articles I have read this week
Building companies & culture
👉Zigging vs. zagging: How HubSpot built a $30B company | Dharmesh Shah (co-founder/CTO) (Lenny's Podcast)
Some similarities with our cultures and some amazing learnings! A MUST:
Zero direct report as CTO to focus on what he does the best
Keynotes: Make people laugh for great keynotes
A lot of practice, and recordings
LPM = laughs per minute.
High strong correlation between the most popular Ted talks and high LPM.
When you're telling the story, whatever the funny bit is, those have to literally be the last words of that particular segment.
Once you deliver it, then you have to stop talking. The audience needs about a half a second to react, and then they want the permission to laugh.
Having stories such that you can spend the time setting up the story, but then have multiple funny bits, multiple punchlines, because you've already made the investment.
Above a one, 1.2, 1.25 LPM you're in the top decile
Radical transparency: when they went public, they made every single employee an “insider”. We will do that, they make it work at 7000 people.
Office plan: I love their idea of a lottery with some rules.
Fight for simplicity:
Should our leadership principles be “kill complexity” or “fight for simplicity”?
Complexity does kill companies. Maybe not as quickly as other things, but much more reliably than other things.
Everything, even well-intentioned people, will introduce complexity because that's the natural way of the world.
Bundle: very similar to how I think of Spaces:
“Our value proposition is that everything works so well together that being in the top three and having those right features or whatever doesn't matter. Doesn't matter as much as the all-in-one.”
Even if I think it is even better to be top1 if we can because we have shared features.
Categorize your pings:
FYI: “just letting you know, no response expected"
Suggestion: “If I were you I would explore, but I don't expect a response."
Recommendation: “if you decide not to do this, I would appreciate a response in terms of why you don't want to do this, what you learned in the process of exploring this particular thing“
Plea: “I believe this is the thing we should be doing. I'm going to plea with you to please just do this."
Making decisions:
“We like to make data informed decisions, but data doesn't make decisions, people do.”
Is “debate, decide, unite” better than “disagree and commit”?
The calories you spend on a decision should be proportional to the consequences of that decision.
Culture evolution:
“The culture exists to help the great people do great things for the company. That's why the culture is there, and the things they need later as the company scales are different.”
“Just like you would never freeze the lines of code of a product, you would never freeze the lines of code of a culture.”
👉The secret to Duolingoʼs exponential growth (Lenny's Newsletter)
Excellent playbook from Duolingo on how to build product for growth.
How to make experiments:
A sense of urgency leads to compounding growth.
The quicker you launch winning experiments, the quicker those changes impact your growth.
Hundreds of experiments per quarter.
Make a decision as soon as you’re confident you have the data to do so.
Roll out experiments to as many learners (aka users) as you can, as quickly as you can.
Launch fast: the amount of re-work saved by only launching afterward is likely very low, compared with the benefit of having the feature released.
On understanding user intent and how to leverage it:
“our strategic advantage is that our users want to build a habit” ➡️how to create this intent for our members
if we give users useful notifications (with an easy way to turn them off for those who don’t find them valuable), those tend to be well-received.
Check their streak system
Copy first then innovate:
Donʼt reinvent the wheel when it comes to app mechanics.
The app marketplace itself could be seen as a genetic algorithm where winning concepts end up with more users,
Your first approach should be to start with a system that closely resembles an existing successful one, but adapted to your app.
Good deep dive on how they approached leaderboads
How they have been working on notifications for years (!!) and are very careful not to kill the goose:
Modifying existing notifications and even (rarely and carefully) adding new, useful notifications has been a nearly infinite source of gains.
“If we send notifications that users do not find interesting, that they don’t think are worth reading, or that cause them to unsubscribe, we will destroy the channel and kill the goose.”
I’d love us to let members “disable a specific type of notification they don’t like without removing their access to notifications they find valuable.”
Aim for a general frequency cap across all notifications.
👉Contrary Research Rundown #78 (Contrary Research)
Deep dive on Rippling ARR and burn (given their valuation of $13.5bn during the last round in 2024): $350m ARR, burn of $100m
Healthcare
👉Golden years, digital frontiers (Rock Health)
❓Why am I sharing this article?
Better address the segment of older adults
17% of the population but driving more than 50% of U.S. healthcare spend.
Counter to stereotypes, a large number access their care and health information digitally. 70% of respondents aged 65+ reported having engaged with virtual care
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