"Be Different" doesn't work for building products anymore
10 hours ago
- #AI coding
- #competitive strategy
- #software development
- The software development industry is experiencing a 'red ocean' due to AI coding tools making it easier and faster to create and distribute software.
- Product differentiation strategies like unique UX, single feature excellence, business models, or proprietary data are no longer effective as competitors can quickly replicate them.
- Effective strategies in this competitive landscape include proprietary & large distribution, targeting complex and unknown niches, hard or expensive integrations, network effects businesses, compounding data lock-in, regulatory barriers, and bundling by big companies.
- Distribution is key in a red ocean, with existing channels providing a significant advantage.
- Building for obscure and complex niches can avoid competition but may not be viable for VC funding due to small market sizes.
- Products requiring difficult integrations or expensive data sets can deter competition.
- Network effects and compounding data lock-in create sustainable advantages by making products more valuable as more people use them or as data accumulates.
- Regulatory barriers can prevent competitors from entering certain markets.
- Big companies are likely to absorb many standalone products by bundling them into larger platforms.
- Entrepreneurs must carefully choose how and when to compete to build sustainable companies in this challenging environment.