A company defined by its rival borrows the rival's shape
Positioning a startup as a better version of someone else ties its identity to a company it does not control. There are markets where that is exactly right.
If you define yourself by how you differ from the competition, you’re probably in trouble.
Omar Hamoui started AdMob in 2006 to sell advertising on mobile phones, at a time when most phones had slow connections and very little that anyone would call an app. Google agreed to buy the company in late 2009, and the deal closed in 2010 after a long review by regulators. The line is widely credited to him, though its original setting has not been traced.
The warning is about identity. A startup that describes itself as “like the market leader, but cheaper” or “the same service, but faster” has let a competitor write most of its description. When the leader cuts its price or speeds up, the startup’s reason to exist shrinks overnight. Its roadmap also drifts toward matching the rival feature by feature, which is a race the larger company usually wins.
A better anchor is the customer’s problem. AdMob’s pitch was about developers and publishers who had mobile traffic and no simple way to earn from it. That description stays true whatever a competitor does, and it points the team at questions the customer cares about rather than at a comparison chart.
The counterexample is famous. In 1962 the car rental company Avis, a distant second to Hertz, ran advertisements built entirely on its position: because it was number two, it tried harder. The campaign defined Avis by its difference from the leader and ran for decades. It worked because the market was mature: customers already understood the product, and the only open question was which counter to walk up to.
That suggests where Hamoui’s rule applies. In a new market, where customers are still learning what the product is for, a company should describe the job it does. In an old market with a familiar product, a clear difference from the leader may be the most useful thing a buyer can hear. The trouble he describes comes from using the second kind of message in the first kind of market.