Invest in What Can't be Bought
Essay published on March 6, 2013
You are bound to hear these questions dozens, maybe hundreds of times as a founder:
"How are you going to compete with Company XYZ? Can you differentiate from your competition? What if someone creates something better overnight?"
I actually prefer to be in a competitive market. Maybe it's because I'm a competitive person, or because I'm more excited about being the best than being first. But most importantly, it forces companies to get creative. The only way to survive in a competitive space is to invest in things that can't be bought.
It's pretty easy to recognize customer acquisition strategies that can be bought. Pay-per-click marketing, although it requires a bit of savvy, is a game anyone in your market can play. Buying an email list of "leads" and handing them off to an aggressive sales team is something any worthy competitor can do well. Advertising (banners and the like) is most obvious, which requires very little skill to execute. Bet the company on those things and yes, you should lose sleep worrying about competition.
However, when you invest in things that can't be bought, competition with deepest of pockets has a hard time putting you out of business. My good friends at Wistia are beyond brilliant at this. If you've never seen a Wistia video, you are in for an absolute treat by watching this one:
Wistia invests a lot of their time and money in videos and it works incredibly well. I'm guessing it's far and away their most effective marketing tool. There's also no way any of their competitors can write a check and create anything remotely similar to what they do. This style is synonymous with their brand and creates a connection with people that simply can't be bought. That's what I call defensibility.
Cracking the customer acquisition nut is about finding what your team can be great at, and focusing all your energy on executing those one or two things in a unique and creative way. Here are a few more examples of core competencies that can be used to build unique value:
- Branding (MailChimp)
- Content (HubSpot)
- Social savvy (Gary Vaynerchuk)
- Engineering (Dropbox)
- Community (Wordpress)
- Design (Squarespace)
At Help Scout we made the decision from day one to focus on two things our team is capable of doing well: written content (blogging, eBooks) and product execution. I don't think we've nearly mastered them like the aforementioned companies, but we're capable of doing so. Day after day, we're laser focused on getting better at both.
The biggest mistakes I've made as a CEO are when I try things that our team can't do extraordinarily well. By building value in the right places, which often requires a much longer-term view (forget it impacting the bottom line this month or next), we create separation for ourselves in a competitive space.