What to do when an $8 million gorilla launches 3 weeks before you

gorillaFor those of you who haven’t been following this blog, in April I left my position as COO of Angelsoft.net after spending 4 years trying to meritocratize the early stage investment process.  I didn’t know what I wanted to do, but by June I had decided to build SetJam, the TV Guide for full-length TV shows and movies on the web.

Things have been going just like startups go.  There have been ups and there have been downs.  The end result however, is that I’ve assembled one of the most talented product teams I’ve ever worked with and together, we’ve built a product that will finally make online TV as easy (and I believe better) than traditional TV.

We’re set to launch our private beta next Tuesday on October 6th, and I believe it will be great.  About a week ago though, I got an email from a Xoogler friend of mine asking if I’d seen a new startup that had just launched that day at TC50.  I could tell from the link that my friend had just alerted me to the bogey man I’d been warning my team about–the big competitor I KNEW was out there, but couldn’t find.  I knew because the URL of the startup–“clicker.com”–probably cost more than the life savings I’d put into SetJam.

What do you do in a situation like that?  My decision was not to read the article.  I had a marketing piece and some product work my team was counting on for that day, and I couldn’t afford to distract myself.  Yesterday, I finally decided we were ready enough for launch that I could take a look.  As this blog post indicates:  I’m distracted.

I’m also more focused.  I’ve been here before and competition makes me better.  Back in the first months of Angelsoft.net, our goal was to become the official software provider to the Angel Capital Association.  We pitched them and they declined.  We decided to move forward anyway.  We asked if we could do a focus group at their next annual meeting and they declined.  We rented a suite in same hotel they were having the conference for our meeting.  We asked for the attendee list (which they’d handed out the year before), and they declined.  We created the most comprehensive list of angel groups in the world.  The morning before my focus group, the ACA announced in the opening session that they were launching their own angel group management software and that they did not approve of other efforts.  That evening I led a focus group of 30 of the most respected Angel group managers in the world to find out what kind of problems they were facing.  Today, Angelsoft is the official software of the ACA and every other angel organization in the world.

So how do I plan to become the TV Guide for full-length TV and Movies on the web?  By using the hard-won knowledge I gained at Angelsoft (sadly too often by NOT following the principles below) to compete:

  1. Let your community build your software: At TC50 Clicker demonstrated a product that has about every bell and whistle you can imagine.  SetJam is stripped down to the bare essentials.  I’ll let our users tell us what they need instead of deciding for them.
  2. Evaluate your competition honestly: At TC50 Clicker demonstrated how they were better than Hulu by showing that it was impossible to find the full-length episodes of Charlie Rose.  They achieved this effect by choosing NOT to click on Hulu’s “TV Full Episodes” filter.  Admittedly, we all fudge a little in demos, but really?
  3. Know your partners:  At TC50 Clicker stated that they were focused on streaming video now, but would soon be adding downloads from sites like Netflix.  Netflix streams their videos.  Netflix is already part of SetJam and it works great!
  4. Live within your means:  I was hoping to bootstrap SetJam.  We’ll be launching with an affiliate model that enables us to be profitable on a per user basis the day we launch.  Admittedly, having a competitor raise $8 million on a PowerPoint like it’s 1999 will probably force us to raise some capital to compete, but it won’t be $8 million and we’ll at least be live!

The point of this piece isn’t to bash Clicker.  Their product looks very cool and their CEO, the former CEO of Ask.com, seems like a genuinely nice guy.  The point is, if you know what you’re doing, and you believe you’re the best, competition should only make you better.

If you’d like to participate in our private beta, just go to http://www.setjam.com and sign up.  We’d love to have you help us build the software you need.

If you’re an investor, I’m looking for a partner to help me make Clicker the Ask.com of online video guides.  I think you’ll find SetJam is a real bargain!

Clicker demo video ($8 million in): http://www.ustream.tv/recorded/2162433

SetJam demo video ($50,000 in): http://drop.io/setjam_video

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  • torrenegra

    Great post RJ. When we launched voice123.com six years ago we were the only marketplace of its type. A year later, a few other similar marketplaces appeared. Since then, we have been always feeling the pressure to stay ahead of them to keep our competitive advantage. It is because of them, our competitors, that the software behind Voice123 continues to be improved, significantly, even today. Good for us, good for our competitors, good for the industry.

    By the way, I'm sure you know this, but it is always important to remember that the general public doesn't always know what is better for them. As Henry Ford said: “If I’d asked people what they wanted, they’d have said ‘faster horses’ “

    • http://www.angelsoft.net drstarcat

      Thanks Alexander. Re: “Public doesn't always know…” That's true. I just
      meant to say that I think it makes more sense to release a product with the
      minimal feature set and then listen to your community for the “other” stuff
      that's important. Sometimes direct feedback can be hard to interpret, but
      by reading it in the context of your analytics and the general chatter about
      your product, I think you end up with a much better product than you do if
      the whole thing springs from your head like the daughter of Zeus!

  • http://www.setjam.com drstarcat

    Bill Payne gave me the following advice that I thought was worth passing on:

    So sorry you ran into this buzz saw. Being blind-sided is the bane of all startups, especially by a well-funded competitor who has a head start.

    First-to-market is often not what it is cracked up to be (although starting with $8 million can give one more options than starting with $50K). My only advice is (1) stay on top of the competition – quickly assess what the users like and dislike; (2) stay flexible and nimble – ready to quickly be better than Clicker.com; and finally (3) acknowledge Clicker.com and make your customers know you want to be better, cheaper, faster, etc

    Competitors with $8 million to spend are often less willing to change directions than are bootstrapped entrepreneurs. Take advantage of your nimbleness and flexibility. If Clicker.com does everything right – you may lose. But, seldom does that happen for first-to-market competitors.

  • http://avc.com fredwilson

    i wouldn't worry too much

    $8mm for a startup is a lot of money. it can often be more of a liability than an advantage.

    and less is often more in products

  • http://openid.schmidp.com/schmidp Philipp Schmid

    Hi,

    how about supporting different languages then just english?
    I think users/customers who don't speak english as their mother language, are often overlooked.

    And it's especially hard for people who live outside of the united states to find content that actually plays without having a VPN to the states.

    (a VPN client to watch movies on hulu from abroad is probably a business case on its own).

    Best regards
    Philipp Schmid

    • http://www.setjam.com drstarcat

      Philipp, I fully understand your concerns. My whole team is located in
      Warsaw and we've had to do some gymnastics just to be able to test our
      stuff. We've definitely got our eye on both bringing international, foreign
      language content to the US as well as making our content available
      internationally. My guess is it will take about 3-5 years to create a
      unified, world-wide television network.

  • Jim Lanzone

    Hey Ryan. I know the feeling – can't tell you how many times that's happened to me in the past, especially as the little guy among giant companies in search. Ask survived and then grew to our sale to IAC by focusing on the things we could control, which mostly meant making our products better for our users and ignoring the hoopla going on around us (especially around the time of Google's IPO in '04, when we grew the most). In this case, no matter how much we've each raised, both Clicker and SetJam are small relative to the big media entries in the online TV space, current and future. Who knows, maybe there's something we can do to work together. At any rate, saw your video and it looks like you're developing some really cool stuff. Good luck with the launch!
    – Jim

    • http://fogz.eu/4fred Shakir Razak

      So Cool!

      Hi,

      You're both fleas in the face of the big boys, and especially the patented UI's (+ sales offices) of Rovi, Microsoft, IBM and Google.

      On the other hand, the last time you looked, how many established TV guides were available (print and Digital)?

      A more pertinent question might be who's positioning themselves only to be acquisition-bait???

      Best wishes & Kind regards,

      Shakir Razak

      • http://www.setjam.com drstarcat

        Shakir, SetJam's not for sale. And we're not looking to become a TV Guide.
        I'll be writing about who we are for our Tuesday launch. You won't want to
        miss it.

    • http://www.setjam.com drstarcat

      Thanks Jim. And thank you for the motivation. This is a big, young market,
      and as we are both aware, we're both minnows. Good luck with Clicker.

  • http://www.parkparadigm.com parkparadigm

    SetJam looks great and the vision seems obvious. Do you foresee SetJam transcending/managing the unfathomable stupidity of 'national' rights management? One of the most ridiculous outcomes of the digital age is international media companies refusing to sell access to content as a function of the location of the buyer. Media companies complain about pirates but then make it pretty near impossible for any paying customer to do anything but shovel up the crappy fixed packages they sell. So if I want to watch NBA basketball in the UK, or Premier League Rugby in France, or French Top14 rugby in the US…etc. will I be able to using SetJam?

    Also how is your business model impacted if say Apple gets all content providers to sell through iTunes? Understand this may be unlikely for lots of reasons, but what if?

    Also agree with Fred that money (beyond a certain minimum) isn't always a panacea – if it were, corporate venture land wouldn't be strewn with train wreck after train wreck…and whenever you are in a tough patch just remember one word: Webvan.

    • http://www.setjam.com drstarcat

      See the reply above about the international stuff. We're trying to build an
      international TV network where everyone in the world has access to the same
      content. I believe it will take about 3-5 years.

      As to Apple, well, it's always been a dream of mine to take them on at
      something. We'll see if I like it as much when they're blowing me away with
      their incredible design.

  • http://twitter.com/jayfeitlinger Jay Feitlinger

    Ryan, great post. I am in the process of building out a new business idea that seems to me so simple but yet no one has launched it yet.

    My hesitation over the past few weeks has been exactly what your article addressed. I feel that some big player out there has been building this idea and the day before we launch they will announce their launch that is bigger, faster, etc.

    Your article gave me the motivation (well kick in the butt) that I needed to proceed. I also found your additional comments below very helpful on staying on top of the competition – quickly assess what the users like and dislike; stay flexible and nimble – ready to quickly be better than Clicker.com; and finally acknowledge competitor and make your customers know you want to be better, cheaper, faster, etc.

    I just signed up for the Beta and became a fan on Facebook. Congrats on the upcoming launch and can't wait to see the end product.

    • http://www.setjam.com drstarcat

      Thanks Jay. For someone who has been trying to help startups for the past 5
      years, it means all the world to hear that I've encouraged you to go after
      your market. Take it to 'em.

  • Name

    “I’m looking for a partner to help me make Clicker the Ask.com of online video guide”

    this is bloody brilliant.

  • justinboland

    This was very awesome. Much more detailed and useful than 99.9% of the business blogs I read day to day. Thank you for taking the time to do it right, as a young weirdo launching a label this was immediately valuable stuff.

    • http://www.setjam.com drstarcat

      Thanks Justin. I'm glad it helped. I really try to be open along the way.
      All of us who are crazy enough to put our jobs, families, and lives on the
      line for a chance to build something great are in the same boat! We need
      each other to survive.

  • http://www.FollowSteph.com/ Stephane Grenier

    It's actually a good thing. If big money is willing to invest into the same idea, there's something there.

    And I wouldn't worry too much about competition. Every good solution is bound to have competition at some point or other, otherwise it's not a good business idea.

    Not only that, but how many industries do you know that has only one business? There's always room for more than one company.

    As well, just because they have big money behind them, it doesn't mean they can execute. I've seen many large efforts fail. I'm not saying that they will, but I definitely wouldn't quit because a major competitor comes to the market.

    I'm the founder of LandlordMax and since I started my company, I've seen many competitors come and go. Some from big known companies. Our sales haven't slowed down one bit, they've actually continued to grow! Actually, we get a lot of people finding us after being disenchanted with some of the very big company offerings. Big money has different advantages than small shops ;)

  • Dr. Smythe

    RJ,

    Slightly OT. The interface looks impressively simple., May I remark however that the references to who you are take away from the features of the product.

    It annoyed me a little that you started with explaining your original background, your position in the present company, and your predictions (why would I trust them, any third party research?) and then you even close with “I and my team” (team and I, our team, etc?).

    I think the product speaks for itself, and would speak even louder without the references to yourself or your viewpoints. If anything, tell me what's in it for ME, which problem you solve for ME.

    Dropbox does a great job of removing the individual voice, however visionary their founders might be, and actually communicating with me in a very very pleasant tone. I think that's missing from the video.

    S>

    • http://www.setjam.com drstarcat

      That's good feedback, and let me be clear–SetJam IS a team effort. And
      anyone who knows me, knows that I have spent nearly a decade trying to build
      great software and have always given the credit to my team for our successes
      and accepted personal responsibility when we failed.

      The video was actually a submission video for a speaking engagement that
      asked to have me introduce myself in the beginning. It wasn't intended as a
      “product” video. Believe me, for that, you'd never even know who I was.

  • http://twitter.com/pzupan Paul Zupan

    You seem to have hit on a common concern by startups. As you said, it's the obvious issue many of us don't want to confront. But I think competition helps refine strategy – it creates the metric for measuring success. It seems to me it's a good thing (though we would all love to have a the market to ourselves). Thank you for your insight and wisdom.

    • http://www.setjam.com drstarcat

      Thanks Paul. It probably is good long-term, but you just can't avoid the
      “kick in the gut” you feel as an entrepreneur. This piece was as much an
      attempt to relieve some of that anxiety as it was anything else. Having
      written it and reached out to some people I trust, I feel a lot better and
      am once again focused on building something great for people who love TV.

  • http://dbreunig.tumblr.com/ Drew

    Great post. Really shows the importance of focus and honesty (to yourself!) a good startup needs. I'm looking forward to your launch!

  • http://twitter.com/jeffshattuck jeffshattuck

    Just reading your post, I can tell you are committed to creating something cool. Microsoft under Ballmer will never be able to achieve this. The best they will ever do is leverage their monopoly, admittedly a BIG DEAL, but these past several years have proven beyond a doubt that better code, code that is clean, fast and satisfies users while offering up something unexpectedly cool, wins. MSFT has proven over and over and over that the only thing they do well is bloatware. Sure, some of their server side stuff might be decent, not sure, but their general consumer code is just horrific (XBOX excluded). I'm pulling for you!

    Jeff
    http://www.cerebellumblues.com

  • Chris Hong

    Hi Ryan, discovered your blog from a tweet.
    As a fellow entrepreneur, I definitely can relate to how you felt.
    Glad to read that you didn't lose focus — you persisted in winning customers and improving your product — and you realize competition will arrive sooner or later (if the market is worth pursuing).
    – From Chris Hong, another entrepreneur who bootstrapped with his life savings to get the product (service) out the door.

  • http://www.sayvee.com/ Nico Boesten

    Thanks for the vulnerability. Hope you do well – I've signed up for Beta.

  • http://twitter.com/mikesimonsen mike simonsen

    I hear you, man. You may not realize it, but this is to your advantage!

    We launched our bootstrapped startup Altos Research http://www.altosresearch.com/ 3.5 years ago. Just a few weeks later, Zillow launched with a front page New York Times article. They raised $90million. 90!!

    Lessons I've learned along the way:
    1. With $90 mil they are forced to build a very different business than us. Over time, while we have broadly similar real estate market data, we find that we've been able to position as the premium product and the MUST be mass market.
    2. We now have more opportunity as potential partners than direct competitors.
    3. That's good because guys that can pull off what they have are clearly smart. it turns out I really like these guys.
    4. There has been almost no instance in the past few years when I regret not taking venture money. Their capital gives them certain strength, but limits their options. Our company can do anything, go any direction, attack any opportunity we like. And we are.

    Surprisingly, you have the advantage here. I highly recommend you keep it.

  • Mike

    My first thought on reading this article was that you should read “Surely You're Joking Mr. Feynman”. Specifically the chapter on “Chief Research Chemist…”

    http://books.google.com/books?id=7papZR4oVssC&p

    • http://www.setjam.com drstarcat

      Ha! That was good. It reminded me of a time when I convinced my buddy in
      grad school he could poor rubbing alcohol on his carpet and light it without
      doing any damage. We were doing it in the dark and it didn't *appear* to do
      any damage, but the next morning his floor looked like the surface of the
      moon.

      Good to know Feynman made the same mistake!

  • http://twitter.com/voidfiles alex kessinger

    Hey I am with you on this one. I just created a new TV Guide as well. A couple hours after I put it up hacker news I got an invite to clicker.com. Its cool what they are doing, but I am going compete by doing less. I am trying to have a super laser focus on what I want to do and let them do what they want to do. I am not worried.

    -alex http://staytuned.in

    • http://www.setjam.com drstarcat

      Very cool Alex. When the dust settles a little, we should see if there is
      any way we can help each other out.

      • http://twitter.com/voidfiles alex kessinger

        Yea, I would like that.

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  • http://twitter.com/svmartin svmartin

    I can't tell you how many times in the past I've gotten sick to my stomach reading about or hearing about competitors…and competitors with a ton of cash. I'm finally past that stage and have accepted it. There will be competitors and almost all of them (probably ALL of them ;-) will be better funded than we are. You just have to move on and look forward. I'm just amazed and what some companies can or can't do with so much cash. It really does seem to be a liability at times. The little guys and girls can play with the big boys and girls online. We really can.

  • http://www.thatJENgirl.com/ Jennifer Goodwin

    SetJam.com (TV on the web, fire your cable company 4eva) http://drstarcat.com/archives/163

  • http://www.thatJENgirl.com/ Jennifer Goodwin

    SetJam.com (TV on the web, fire your cable company 4eva) http://drstarcat.com/archives/163

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