I start this article with an incredibly powerful quote from Peter Thiel. Mr. Thiel is a very smart fellow who started, and then sold, PayPal and became a billionaire. Now he is a professor who teaches at Stanford.
Thiel coined the phrase “Competition is Evil” in his book Zero to One, which should be on your reading list.
What Thiel means by this short phrase, is that your goal is to avoid being commoditized and similar to everyone else (which destroys your pricing power). Instead, you should create your own little baby monopoly that you really “own.” In other words, Thiel advocates creating a smaller “niche” that is absolutely your own.
Once you follow Mr. Thiel’s advice — once you become a monopoly in your niche — you aren’t “competing” anymore within your niche. And the best thing about being a monopoly is that monopolies have pricing power. Note the use of the word “power” just now.
Keep this thought in your mind. When a client or customer asks you: “How would you compare yourself to [name your number one competitor]?” — you have probably already blown it because in your client’s/customer’s mind he sees you as “competing.” The essence of competing implies your products are “comparable” and so the client or customer could easily ask you: “Why are you more expensive?” And then it is likely that you and your competition will end up in a race to the bottom of pricing and you lose all pricing “power.”
You want to be able to say something like. “We’re not actually competitors. The other party you mentioned is really great at [X]; however, when it comes to [Y] we are the top/only game in town, because….”
Thiel’s point, at heart, is a statement that you have to be “different.” It is important that you outperform in your smaller niche — it is the first thing you must do — be different!
And Thiel is not the only one making this point. Indeed, all the smart thinkers are saying the same thing:
Peter Drucker says you have to “innovate” which means do something differently.
Michael Porter says that the biggest mistake companies make is trying to be “better” than their “competition” (which only enriches the customers, employees, and other related parties), when instead they should be striving to be “different” from their competition.
Seth Godin, who wrote some brilliant marketing books, including Purple Cow, which should also go on your reading list, touts the virtues of standing out (i.e. being different), like a purple cow would stand out.
And of course yours truly, that incredibly intelligent, and arrogant-in-a-nice-way, columnist writing this article, is pushing that view hard. There is literally nothing worse than being indistinguishable from the “crowd” — you have to be different and thereby avoid the “evil” of competition.