How To Compete With Amazon and Google

**Harj Taggar** (0:00)
How the hell does anyone compete with one of the greatest companies of all time on the thing that they're experts at, right? And it turned out that just picking the right avocado was too big of a challenge for this trillion dollar company.

**Michael Seibel** (0:20)
Hello, this is Michael with Harj and Brad, and welcome to the Partner Lounge.

**Harj Taggar** (0:25)
Hey, so as YC Partners, we work with hundreds of startups, and we find ourselves repeating the same advice, it often seems pretty obvious, over and over again. And we found ourselves wondering why.

**Brad Flora** (0:36)
Before COVID, we'd often gather together in the Partner Lounge at the YC office to try to figure out why this was the case, and how we could help startups figure it out faster.

**Michael Seibel** (0:46)
And today, we're gonna talk about competitors. Harj, you want to set this one up?

**Harj Taggar** (0:51)
Yes, you know, one thing I've noticed is that I'll do office hours with a company that's doing great and they'll be psyched themselves out because they'll just want to talk about how worried they are about a competitor. And it will be a big company, another startup. And they're just like, it's like they lost their excitement for their company and replaced it with fear.
And we end up talking about this a bunch, right? Like, what's going on? Like, why is this company that's doing well suddenly feel like they're failing?

**Michael Seibel** (1:23)
Well, it's because their competitor raised $5 million, Harj, and we all know, whichever company raises $5 million first wins, right? Isn't that how this works?

**SPEAKER_4** (1:31)
Like, what do you think, Brad?

**Michael Seibel** (1:36)
What lies do you think, or how do you think folks are psyching themselves out? Like...

**Brad Flora** (1:42)
Well, I think when you start working on something, you think you're the only one that's had this idea, you quickly learn that's not the case. And then it can be very easy to start thinking that you have to compete with this company and have to beat them in order to succeed with your own company. And so you start thinking of things like, they're gonna steal my customers, I have to steal their customers.
Their product roadmap, it must be amazing, so I should copy whatever they do without really thinking about it too much. And it's just a very dangerous mindset that can take you away from thinking about your own customers and having like a first principles approach to building your company. But there's so many lies that founders tell themselves about competition and about what their competitors are up to.

**Michael Seibel** (2:32)
When I think about a YC company and competing with folks, oftentimes it goes through my head and the first thing I tell them is like, the depressing fact that most likely everyone's gonna die. It's like you're not accounting for like the most common outcomes, like you and your competitors, none of you will make something that people want.
And then the second thing they don't account for is that there are lots of businesses where there are multiple winners.
How many banks are there? Like one bank doesn't look at the other banks and say, well, I guess that's it. We got a fold up shop. There's already a bank in existence. And so I often think when I'm encountering this fear thing, I like to kind of run with the fear and be like, let's fear this out to the end point to see what you're really afraid of. And maybe when we open the closet, the thing in the Boogeyman isn't actually there, as opposed to like we're sitting on the bed and just obsessing over all these things that could go wrong.

**Brad Flora** (3:27)
Yeah, the Boogeyman is not there. In fact, I think oftentimes your competitors are just as messed up as you are.
You read about the fundraising and TechCrunch or whatever. And then years later, you talk to someone that worked at that company and they say, oh man, what a mess. Like everyone was leaving then, the CEO was on a bender and was all sad because we lost all of our big customers. You just don't know. And it's so easy to assume that if you're having a hard time, everybody else must be having a great time when everyone is having a hard time.

**Harj Taggar** (4:07)
Yeah, I think that's a really important point. So, one of the things I remember surprised me the most about when I switched from being a startup founder to a YC partner is that running a startup, you're exposed every day to how screwed your company is. Like you're just hitting the face with it every day, right? And so you constantly feel like you're failing. You're not like, you don't know how to build product. You don't know how to manage people, all of this stuff.