Direct vs Indirect Competition

When thinking about competitors, they can be bundled loosely into one of two categories: direct and indirect. Direct competitors sell essentially the same products and services and are obviously and undeniably competing with each other. For example, Apple’s iPhone and Samsung’s Galaxy phones.

Indirect competition is somewhat less obvious, which can lead to companies thinking and sometimes stating that they have ‘no competition’. Indirect competition comes in the form of companies who target the same customers and address the same problem or need, whether that be: thirst, hunger, boredom, warmth, the need to just feel something, anything, in the dull, aching, numbness of life, etc.

Founders thinking that their company has ‘no competition’ is dangerous and incorrect. In 99.999999% of times, the company does have competition. It may not have direct competitors, but it will almost always have indirect competitors. In the 0.000001% of times where there are no competitors (we literally can’t think of any case of this), the market would be so underdeveloped that market entry would likely take years and investors would struggle to wrap their head around the problem and the solution.

Examples that at first glance look like as though they had no competitors:

Just-Eat – “There was no way to order food online.” But you could order a takeaway, or go and pick food up from a restaurant, or cook a meal at home. All of these things target the same customers with the same need: hunger.

Ford -“When Ford brought out the first car, there were no other cars.” But there were horses. And trains. So there were ways to transport people from one place to another. They weren’t as efficient, but they existed.

Can you think of any companies or products that have absolutely no competitors?