Many startups with an innovative tech product claim that they do not have competition because nobody else does what they do. This is a dangerous assumption to make.

By introducing a new tech product into the market, you are asking customers to:

  • Stop spending time and/or money on something that they currently use
  • Create a budget for something they have never purchased before
  • Voluntarily take on more risk by adopting new technology from a new company

Startups also compete against the status quo (that is, doing nothing), which often presents the greatest competition they face.

Reference and economic competition

Two main types of competition exist:

Reference (direct) competition: Companies and/or products that compete against your startup and/or product within a specific category—you compete against reference competitors by differentiating your startup and/or product from them

Economic (indirect) competition: Companies and/or products that compete for the same budget—you compete against economic competition by fighting for company and/or product supremacy

Competition and the technology adoption lifecycle (TALC)

In the Early Market, the focus is primarily economic competition. There are other products that may provide visionaries with the potential for competitive advantage. The real competition is the status quo—customers may choose to do nothing and avoid the risks associated with purchasing new technology.

To succeed in this market, you must create your own competition. Develop a persuasive argument and credibility with technical specialists, who evaluate new products and technologies. Focus on product-centric attributes (for example, fastest, easiest to use, most functional, least expensive).

In the Chasm and Niche Markets, you must continue to surpass the economic competition (that is, compete against the status quo). You must also differentiate yourself from the reference competition that has not addressed key problems or situations within the segment.

You accomplish this by developing a product strategy (that is, a whole product) that illustrates your product’s differentiated benefit and competitive advantage.

You must also choose your competition (incumbent companies) and demonstrate what differentiates you from them through your positioning and marketing communication program.

For further reading, see the article entitled Competitive Differentiation.


Wiefels, P. (2002). The Chasm Companion. New York: Harper Business.