Customers first, competitors a distant second
A small software company cannot win a feature race against a large one. It can win by making its own product better every day for the people who use it.
Listen to your customers, not your competitors.
Joel Spolsky has made versions of this argument for years, on his blog and in his columns, first as a co-founder of Fog Creek Software and later as a co-founder of Stack Overflow. The most detailed is his 2002 essay Fire and Motion, which describes how a large platform company releases a steady flow of new technologies, and how smaller rivals exhaust themselves adopting each one. His conclusion was that a small company does better to ignore the barrage and improve its own product a little every day.
The short line compresses that into a rule about attention. A founder has a limited number of hours, and every hour spent studying what a rival shipped last week is an hour not spent learning why a customer cancelled. Competitors are also a poor guide to what matters, because their choices reflect their own customers and their own mistakes. Copying a rival’s feature list imports all of those without the reasoning behind them.
Customers, by contrast, reveal needs directly. Support tickets, cancellation reasons and the workarounds people build in spreadsheets show where a product falls short. A company that reads those carefully tends to build things its rivals have not thought of, because it is working from evidence the rivals do not have.
The rule has a known failure, and it was playing out when this line was circulating. When the iPhone arrived in 2007, the established phone makers had loyal customers who valued physical keyboards, long battery life and reliable email. Those customers were telling the truth about what they wanted at the time. Companies that listened closely to them and treated the new touch-screen phone as a niche product lost ground quickly once buyers discovered they wanted something else. Current customers describe the present. A competitor sometimes shows the future first, especially one entering from outside the market.
Sales can force the issue in a different way. Companies that sell to businesses often find buyers comparing products line by line on a checklist, and a missing feature can lose a deal even if the customer would rarely use it. In that setting, ignoring competitors has a direct cost, and many firms end up building features mainly so the checklist looks complete. Spolsky’s approach suits products that win on quality of use more than on the length of a comparison table.
There is a practical middle ground. Listen to customers when deciding what to improve and how. Watch competitors for shifts in price, business model or technology that could change what customers will expect, and ignore their individual features.
The line is right about where a small company should spend most of its attention. It is incomplete as a claim that competitors deserve none.