How to handle competitors

[drePil]

Hi, my friend came to me with a great idea for an app. As a programmer I designed and built the system and we are now in talks with some big companies. Unfotunately we cannot protect the app however the app is useless without a database of people (which is the barrier to entry). Currently there are 3 companies that have built a national database and several that have local databases. We are meeting with one of the big 3 next month to see if they are on board.

We are turning up with a system on a plate they can start using within a few months. Since we are a start up with minimal funds we could not pay to use their database so we we're thinking about giving them a percentage in return for access to their database. The problem is with the other 2 national companies. Could we and the first company go to them and say "You're old way of doing things is becoming obsolete, if we can use your database then your customers will have use of our app" or would the other 2 companies need a piece of the pie? Do we run the risk of them producing a similar system if we don't make it worth their while? Would there be a conflict of interest because the first company and the other 2 are all competitors?

The application of the app means that it would be impratical to have 3 different apps that do the same thing so maybe it's a case of first one to market wins.

Our protection of the idea is the barrier to entry (filling the database of people) so if we get exclusive access to all 3 then we would be laughing but the question is how to do it best.

Many thanks for any advice or guidance you can give!

[Ashvini Kumar Saxena]

Hi,
It is indeed a tough business question. If you create a product that needs data from others to survive, there are following problems,
1) Companies can develop the product themselves in case they find your idea great enough
2) companies may not open data tap for you.
3) They may close the data tap if they do not see the value.
These are huge business risks and the probability of their happening may be low but impact if they occur for you is huge.

Here is what I feel, you can do( just my opinion).
1) Create a solid business plan, how you and partners are going to benefit from your app.
2) Get some solid number crunching to show , how much revenue will you make or how much cost will you save when they use the app
3) Try to get into contract where they are not allowed to develop the similar app for a few years
4) In my opinion, you will have better chances with smaller companies than large because they are more open to challenge, but they could be greedier
5) Do not reveal your app unless you have full trust on people you are dealing with
6) Hide or obscure important pieces of your app so that even if you have to give it to them, you know that they will not know the logic of your app
7) Set clear terms. Even if you are a small company, you are providing value and you need to highlight that
8) work with smaller set of data rather than whole data(you probably will not get access to all the data)

[BarbaraKParker]

Being on the top of the market is not easy, and competitors are everywhere.

[noxango]

sounds like a great plan

[bluestellar]

Without competition, the world would be a lot less challenging, and even boring. Everybody would get everything that wanted without even trying, and appreciation level for these things would drop to an all time low. Most things then would be taken for granted.

Here's a tip. Do not obsess over your competitors. This will only cause you to become more anxious, draw up fear, and then end up spiting them when for the most part, they have done nothing wrong. Also, by worrying about them too much, you will end up doing nothing done. And also, learn from your competitors. If somebody is doing better than you, instead of envying them, learn from them. When you become more open minded about your competitors and what they go through in order to stay at the top of their game, you'll become better at whatever you are doing also.

[ClearPresence]

Bluestellar makes a good point. There are very very few situations where a competitor will steal a start up's idea, and for good reasons. It is extremely risky! The reason entrepreneurs can make so much money is because they get themselves in the middle of this risk. For a CEO of an established Fortune 500, they just want to keep things running right and growing slightly. So, it is VERY rare that a large company does something like this.

My advice, stop worrying and start doing! Over the course of my career as an entrepreneur, I have found worries like this to just be obstacles in the way of my taking action...My brain trying to get me to stop. I dont let it happen anymore!

Hope this helps!
Clear Presence Media - Online Marketing Management & Consulting

[rockden]

i think better idea first you check the competitor and follow the strategy these use it and next you proper learn the project database and local database next make plain and do the work start i think you successful.