Last week, I listened to seven startups pitches at the Band of Angels Deal Selection committee wondering at least three times, hadn’t I heard this deal before?
Do customers crave another user friendly wearable that counts steps, heartbeats and measures sleep quality better than Apple Watch, FitBit, and Garmin? Is now the right time, to replace customers’ email clients with the proverbial smarter, machine learning sorter and linker to everything they’ve touched for more efficiency? Is it really time for a smashing breakthrough in video editing or sharing that offers nothing new but a user interface that’s easier to use and cooler than absolute zero?
Welcome to the Me-too pitch. While you’ve worked your butt 24/7 for the last year, be aware that active investors have most likely seen a pitch like yours before; maybe earlier this morning.
And we get that there’s plenty of room for improvement. While first mover caché, headlines and potential advantage attract us, investors know that most of the value creation comes from the smartest of the fast followers. A blatant example are the German Samwer brothers who studied Silicon Valley success stories and went back to Europe to actively clone U.S. internet companies. Their October 2014 IPO, Rocket Internet, was valued at $7.5B.
The critical question is: Are you the next smart fast follower or just another Me-too play?
Focus on the first word: fast. Fast followers draft, pick a passing opportunity and then accelerate. Drafting leverages the pioneers’ success at building customer acceptance, defining critical performance requirements and technology acceptance. If you haven’t done that, you’re just the second competitor.
Passing opportunities can be geographical, alternate market segments, distribution or performance requirements, business models, etc. Your differentiation from others defines your passing opportunity. Accelerating after passing is where fast followers make big gains as they expand beyond early adopters into mainstream volumes. Snaring a few more early adopters probably isn’t worth that much.
Box took Dropbox’s accepted cloud storage solution into the commercial segment. Yammer used the same strategy against Twitter. Apple’s iPhone overtook Blackberry and Palm’s Treo smartphone pioneers by increasing the value proposition from an email device into a universe of applications.
Fast followers have to fight their way in. Typically spending two-thirds what first movers do on technology development, fast followers focus more on business model and go-to-market innovation. While Elon Musk’s SpaceX depends on rocket science, SolarCity’s success came from creating a better financing model for solar customers.
Muscle matters for fast followers. That’s why smart fast followers are either well funded or already have an established presence. Apple’s retail stores provide a distribution platform for new technology that no startup can duplicate. Square created the mobile credit card reader. Intuit quickly got one of their own and leveraged integration with their QuickBooks user base to go-to-market.
Google+ shows that muscle won’t matter if you’re in what I call the “second toaster” position. Who needs two toasters, or essentially identical social networks?
Apply The Jeff Foxworthy Test: You Might be a Me-too if…
Building on comedian Jeff Foxworthy’s classic warning that” you might be a redneck if…,” your value proposition might be a Me-too if…
- Your primary claim is that your easier to use product solves the adoption barriers of the first mover.
- Your go-to-market strategy starts and stops at search optimization and word-of-mouth adoption. (And please don’t mention your incredible Kickstarter campaign)
- Your software as a service business model (SAAS) surpasses incumbents tired server models and you’ll ultimately makes more money from the data such that today’s subscription revenue won’t even matter. (Might as well tell us you’ll fix the Greek debt crisis too).
- Your market study proves people will be willing to choose yours over the incumbent even though you won’t have alpha product available for testing for three months.
- The overall category has never taken off…but now will!
- You’ve been a frustrated user of these products for years and that’s why you’ve created this solution. Do your customers share your experience and passionate counterdepencency?
- At its core, your solution is a slicker workflow. Does this just appease user frustration or change the core value proposition?
- If I can name several competitors you don’t know about
(Please add your own Me-too test questions in the comments section)
Two, Four, Six, Eight, Tell Me How You Differentiate
Smart fast followers leap over first movers by leveraging their breakthroughs and accelerating with better business models, go-to-market and technologies that dramatically change the value equation. Me-too players refine good ideas. If you’re big, burly and have a boatload of capital, refinement might work as well for you as it did for Toyota. But if you’re truly an entrepreneur and a fast follower, you’ve got to seize and expand far beyond the opportunity identified by the first mover.