Measuring Uniqueness

For entrepreneurs looking to start or run a growing business in the consumer space, or even the small end of the business market, it is really hard to get customer "mindshare" without offering a pretty unique product. This raises the specter of one of the perennial entrepreneurial trade-offs: do I start a totally unique business which often necessitates _creating a market_ or do I start a well-understood business which often necessitates competing against established competitors. The matrix looks something like the one I have included here. Basically, the blue areas indicate what is generally possible and likely. The white areas represent what generally takes quite a bit more effort to achieve or may even be impossible in some cases.

First, a matrix is only as good as its definitions, so what do I mean by some of these things? A unique product is a product that few, if any, other companies are producing. This may be simply because they don't know how, they haven't heard the market need, or they are slow moving, or it could be because nobody really wants the product. Unfortunately, many entrepreneurs launch without knowing into which category their product falls. A common product is something that the target customer is used to buying. The simplest example is food--more specifically hamburgers. Restaurant startups offering hamburgers know that they won't have to educate the market about the benefits of hamburgers. Their biggest problem is competing for mindshare against hundreds of other options--i.e., being perceived as better somehow than lots of competing options. They don't get the benefit of inherent uniqueness. Inherent uniqueness does confer some benefit on startups. Really unique startups may get mocked and ridiculed but they often benefit from some press simply because they are doing something different. Difference is kind of inherently controversial--because it offers a subtle (or sometimes explicit) challenge to the status quo.

The phrase "established use" refers to selling the product to a market where the product has an established use. People are used to using that product to solve a particular problem. New use refers to selling the product to a market or segment where it hasn't been traditionally used.

Now, is it possible to sell a unique product to a market where those types of products have an established use? Absolutely, consider Coca-Cola, General Mills--some of the legendary brand power houses. These companies are so good at making "unique" products in established markets that they can do things like sell bottled water (bottled from the same source that supplies your tap) for a significant mark up. The products may not be functionally unique but they are psychologically unique--this is the power of branding. In some cases, the products may be somewhat functionally unique but they are usually not totally functionally unique because products that have established markets also generally have competitors. Creating a psychological "uniqueness" is often very difficult and requires lots of cash. So this is often a harder route for rapid growth companies. Private equity backed companies often do have more of an established brand.

Is it possible to have a common product with a new use? Yes, but again this is less likely. Most of the time the market of consumers has figured out the best uses of products and identifying a new use for an existing product generally doesn't yield venture returns to entrepreneurs. This is often because even if you discover a new use for an existing product, you can't protect that use and secure some form of IP on it--since you are using a common product to do it.

All of this leads us to the 'educate vs. compete' trade-off. Basically, what I mean is that the typical startup entrepreneur has the choice between offering a really unique product to a market that has no idea how to use the product (yet) or offering some more common product where she is likely to face a lot more competition. In my startup efforts I have always opted to try to do something unique--but sometimes I think I am stupid to do so. One of my friends told me that he "wasn't smart enough to do something unique, so he preferred to do startups in markets where people are paying for his service every day." It sounded like a nice compliment but the more I mull on it, I think it could have been a pretty big insult. "Hey dummy, stop trying to do something crazy. Do something normal and just try to innovate / differentiate around the edges." All of this said, I do think that there is at least one inherent advantage to doing something really unique. You can often get noticed and can get more marketing leverage than would otherwise be possible.

This leads me to thinking about what makes up "uniqueness." I wish that there were a more scientific way of measuring uniqueness. I will throw out some thoughts here but perhaps you can think of some more:

• How many competitors would claim that they compete with you (it doesn't matter what you think, how many of them would claim to compete with you) if they understood your product?


• How much "buzz" has your product generated? How many blogs have mentioned it? Or, does your product have an existing, strong brand?


• Is it patented or patentable?


• Do many people think your idea is crazy? [You have to be careful on this one because your idea really could be crazy. This is probably why it takes the typical entrepreneur 6 tries before they have a successful exit.]