I very much agree with Ed's comments on competing with established players... the one thought I would add here is that startups have a great opportunity to "gap-fill" in the early stages of market development. And while its a good thing to see bigger players jumping in as a sign of market validation, once they are there you have to adapt...that is, customers are willing to wait for an established player to deliver. They are held to lower(?), lets just say different standards than younger players...
Link: Competing with the big boys.
I was talking to a portfolio company CEO today about his sales pipeline and one of the key items of interest for me was understanding competitive dynamics. Besides looking at the raw numbers, I like to understand whether or not we are seeing more or less competition, why we are winning, and why we are losing. As I started to dig into this area over the last two quarters I have noticed that the big boys or incumbents have started to show up in more deals. In my mind that is a good sign because incumbents don't enter a market unless they believe it is worth pursuing. I also typically do not mind competing with the larger players as they are generally less agile and less innovative than startups.
That being said, incumbents tend to add confusion in the marketplace and lengthen any startup's sales cycle. Their typical tactics including saying they have the product when they don't, promising they will have the product in one to two quarters (maybe three or four or never is the real answer), or giving it away for free in a bundle of other things that the customer buys. The last one is a tough one to counteract - I mean if the customer gets it for free, then it doesn't have to be as good
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