By Stephen Wunker
While working with Celtel, I lived for a while in Zambia. One of our main competitors there was the state-owned telecom company, Zamtel. Life is pretty easy when your competition is Zamtel.
I once had a service issue on a Zamtel line we used for Internet access, so I called the number they listed prominently in their phone book. It had been disconnected. Small companies don’t necessarily move faster than big companies, but they benefit from having fewer things to do at once.
When ambitious people think about new ventures, they sometimes target sexy, well-established industries like enterprise software. Unfortunately, there are not many Zamtels in the software business. But, if you’re going to compete against an industry incumbent, try to make sure it’s a bad incumbent.
Alternatively, try to find a space that’s uncontested. It’s possible to build a good business adjacent to strong incumbents if you have a unique way to make money on the customers that those companies hate to serve. If Zipcar had competed with Hertz to rent cars to business travelers at the airport,
it wouldn’t have stood a chance. So it created a by-the-hour model of car rental to customers like young adults needing to pick up a car in the neighborhood for a quick grocery run. By the time Hertz woke up to the opportunity and created a similar business, Zipcar had locked up 80% of the booming new market and was valued at $1 billion.
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