When we think about competition in business, what comes most frequently to mind is the “winner-take-all” stories that romanticise one company beating all others in its category. Rarely is that the case in the real world, especially in technology, where the “category” definitions are weak, unclearly defined, and rapidly evolving. Silicon Valley companies brought about a revolution where strategic alliances crossed the boundaries of competition, and boardroom handshakes have defined an era of revenue growth that many other industries could probably learn from. Think of any of the recent AI companies, like ChatGPT or Anthropic, and why they allow a Google Drive integration while competing with Google’s Gemini? Or why do the cloud computing competitors - Amazon AWS, Microsoft Azure, and Google Cloud - offer deep integration into each other’s products? The answer is shocking, brilliant, and simple - companies that leave their competitors alone find themselves on an island. And it’s usually an island of unprofitability because they’ve left billions of dollars on the table. This is the age of “co-opetition,” the growth hack of the 21st century! What’s the secret pasta sauce behind co-opetition? What’s the secret pasta sauce behind co-opetition? Tech didn’t invent co-opetition. It just perfected it. The secret sauce here is pasta sauce, literally! In the 1980’s Howard Moskowitz helped reshape pasta sauce maker Prego’s strategy by finding that there isn’t one “perfect” pasta sauce; there were dozens! And by catering to all of these different niche tastes, Prego’s revenues exploded. Tech took inspiration from this tactic and realized that the undefined landscape of technology has different tastes as well, and that there isn’t a single market “pie” that needs to be captured. It’s a buffet with countless niches! Also that in many cases, product stickiness is high, and your customers are already using your competitor’s products in a different category or sometimes even in the same category. So the question now becomes, do you force your customers to choose, or do you meet them where they are and take a little slice of the pie yourself? The choice is obvious! Think this is just a tech thing?? Think again. Before you conclude that tech companies alone invented and played this game, pause for a moment. Traditional companies have been working through this model for years, it’s just been hiding in plain sight. All tech did was to perfect this game. The examples of this co-petition model start from your home. More specifically, the driveway. Fierce rivals in the automotive industry, Toyota and BMW, shocked the world by developing the platforms for the Supra and Z4 sports cars together. This led to a significant reduction in R&D costs (and likely time) and each gained world-class sports cars to sell to their loyal fan bases. This way, they collaborated in the factories while competing in the showrooms. Moving the examples from the driveway to the runway, Lufthansa and United created the Star Alliance where they act as partners, while continuing to compete in several sectors they each serve. The collaborative approach led them to share not just baggage systems and lounges, but most importantly, passengers. They significantly expanded their flight route network globally, which neither could build alone, or build alone in a profitable manner. This competitive on the outside, collaborative on the inside model allows them to offer tickets to virtually any city on Earth. The examples can continue on, from pharmaceutical giants co-funding life-saving drug development to McDonald’s selling millions of Oreo McFlurries, the model exists and thrives. The point, though, is pretty clear - the fastest way to grow your business is to leverage the strengths of your rivals. The “Co-Opetition” playbook -  How to find gold in your rival’s backyard! Enough examples, let’s get down to brass tacks! How would you, a techpreneur or a tech executive, find such game-changing opportunities? The search begins with finding friction and ends with secret boardroom meetings. Here’s the playbook - Create a customer journey map - it always starts with customer research. To find the opportunity, you don’t need to know what your customer does when they use your product, you need to know what they did 5 minutes before and 5 minutes after they used your product. What other tools do they use in their job? What other tabs are open before, after, or even during their usage of your tool? If your product is a marketing analytics platform, you need to know what email management system they use. If you’re selling accounting software, you must know who their preferred payment processor of choice is. The gaps between these essential tools are where the partnership gold is buried.


Copy the “Copy-Paste” action - When your users say, “I wish your tool could just talk to X,” they’re handing you the roadmap for your next partnership. The biggest clue in the effort is where they copy and paste your data. If you’re customers are exporting or downloading a CSV from your tool, and uploading it somewhere else, then you know the critical point of friction. That copy-paste action is a big blinking neon sign that says “integrate with this tool NOW!” Create a customer journey map - it always starts with customer research. To find the opportunity, you don’t need to know what your customer does when they use your product, you need to know what they did 5 minutes before and 5 minutes after they used your product. What other tools do they use in their job? What other tabs are open before, after, or even during their usage of your tool? If your product is a marketing analytics platform, you need to know what email management system they use. If you’re selling accounting software, you must know who their preferred payment processor of choice is. The gaps between these essential tools are where the partnership gold is buried. Create a customer journey map - it always starts with customer research. To find the opportunity, you don’t need to know what your customer does when they use your product, you need to know what they did 5 minutes before and 5 minutes after they used your product. What other tools do they use in their job? What other tabs are open before, after, or even during their usage of your tool? If your product is a marketing analytics platform, you need to know what email management system they use. If you’re selling accounting software, you must know who their preferred payment processor of choice is. The gaps between these essential tools are where the partnership gold is buried. 5 minutes before 5 minutes after Copy the “Copy-Paste” action - When your users say, “I wish your tool could just talk to X,” they’re handing you the roadmap for your next partnership. The biggest clue in the effort is where they copy and paste your data. If you’re customers are exporting or downloading a CSV from your tool, and uploading it somewhere else, then you know the critical point of friction. That copy-paste action is a big blinking neon sign that says “integrate with this tool NOW!” Copy the “Copy-Paste” action - When your users say, “I wish your tool could just talk to X,” they’re handing you the roadmap for your next partnership. The biggest clue in the effort is where they copy and paste your data. If you’re customers are exporting or downloading a CSV from your tool, and uploading it somewhere else, then you know the critical point of friction. That copy-paste action is a big blinking neon sign that says “integrate with this tool NOW!” Let’s exemplify the theory to better understand it. Imagine you’re running “Briefly,” the SaaS tool that creates simple, cool-looking, AI-powered business reports. While your customers love the reports, you find that they’re screenshopping the graphs, which are the outputs of your tool, and pasting them into Salesforce manually. This is the point of friction, what you’ve been looking for! You foresee an integration with Salesforce where a Briefly report can be sent to a Salesforce account with just one click! On the surface, it’s a HUGE win! Salesforce makes its own platform sticker and Briefly gets access to the massive Salesforce ecosystem. But there’s a catch - The handshake has a dark side Before you pop the champagne, you have to navigate the intricacies of working with a giant since it’s not a partnership of equals. It’s high-stakes poker where the small player could get crushed. There are some tough questions that need to be answered first - How do we keep them from stealing our secret (pasta) sauce? - Salesforce has thousands of engineers, and an integration could expose Briefly’s core logic, which then exposes how Briefly actually works, which they could use to build their own version, rendering Briefly obsolete. How do we keep them from stealing our secret (pasta) sauce? - Salesforce has thousands of engineers, and an integration could expose Briefly’s core logic, which then exposes how Briefly actually works, which they could use to build their own version, rendering Briefly obsolete. What if we become too successful? - What’s stopping Salesforce from changing the rules if Briefly becomes the most downloaded reporting app on the Salesforce App Exchange? Could they raise their commission from 15% to 40%? Or could they threaten to delist Briefly unless they get equity in the company? Could Briefly’s cash cow be held hostage? What if we become too successful? - What’s stopping Salesforce from changing the rules if Briefly becomes the most downloaded reporting app on the Salesforce App Exchange? Could they raise their commission from 15% to 40%? Or could they threaten to delist Briefly unless they get equity in the company? Could Briefly’s cash cow be held hostage? Whose fault is it when something breaks? - If the integration breaks or there’s a lag in performance, will customers blame Briefly, even if it’s Salesforce’s fault? Briefly’s reputation is now tied to a platform it has absolutely no control over. Whose fault is it when something breaks? - If the integration breaks or there’s a lag in performance, will customers blame Briefly, even if it’s Salesforce’s fault? Briefly’s reputation is now tied to a platform it has absolutely no control over. This is a double-edged sword. The Briefly team must fortify the idea with different resources in order to proceed. They could use a three-pronged defense strategy - Technical Fortification: Briefly designs the API to be a black-box so Salesforce can send data requests and get a finished report back, but gets no visibility into the “how” of report generation. Briefly’s core API remains secure on its own servers.


Legal Armor: A top-tier law firm is hired to create the partnership agreement, which includes clauses explicitly prohibiting Salesforce from using any of the data from the integration to develop a competing product of their own. The agreement also defines clear ownership of the data and establishes a year-long “run off” period, which means that if Salesforce terminates the deal for any reason, the integration between Briefly and Salesforce must continue to work for the next 12 months for existing customers, giving Briefly time to react and adapt.


Strategic Independence: Briefly, management makes the rule that no single partner will ever account for more than 30% of the new business. The moment the deal with Salesforce is signed, the management tasks her partnership teams to create similar deals with products that are competitors to Salesforce - like Hubspot, Microsoft Dynamics, SAP, and so on, with the goal to create a partnership web such that no single organization holds the keys to Briefly’s survival. Technical Fortification: Briefly designs the API to be a black-box so Salesforce can send data requests and get a finished report back, but gets no visibility into the “how” of report generation. Briefly’s core API remains secure on its own servers. Technical Fortification: Briefly designs the API to be a black-box so Salesforce can send data requests and get a finished report back, but gets no visibility into the “how” of report generation. Briefly’s core API remains secure on its own servers. Legal Armor: A top-tier law firm is hired to create the partnership agreement, which includes clauses explicitly prohibiting Salesforce from using any of the data from the integration to develop a competing product of their own. The agreement also defines clear ownership of the data and establishes a year-long “run off” period, which means that if Salesforce terminates the deal for any reason, the integration between Briefly and Salesforce must continue to work for the next 12 months for existing customers, giving Briefly time to react and adapt. Legal Armor: A top-tier law firm is hired to create the partnership agreement, which includes clauses explicitly prohibiting Salesforce from using any of the data from the integration to develop a competing product of their own. The agreement also defines clear ownership of the data and establishes a year-long “run off” period, which means that if Salesforce terminates the deal for any reason, the integration between Briefly and Salesforce must continue to work for the next 12 months for existing customers, giving Briefly time to react and adapt. Strategic Independence: Briefly, management makes the rule that no single partner will ever account for more than 30% of the new business. The moment the deal with Salesforce is signed, the management tasks her partnership teams to create similar deals with products that are competitors to Salesforce - like Hubspot, Microsoft Dynamics, SAP, and so on, with the goal to create a partnership web such that no single organization holds the keys to Briefly’s survival. Strategic Independence: Briefly, management makes the rule that no single partner will ever account for more than 30% of the new business. The moment the deal with Salesforce is signed, the management tasks her partnership teams to create similar deals with products that are competitors to Salesforce - like Hubspot, Microsoft Dynamics, SAP, and so on, with the goal to create a partnership web such that no single organization holds the keys to Briefly’s survival. By anticipating the risks and creating mitigation strategies, Briefly created a calculated, defensible growth strategy that will drive them forward. The Collaborators Will Lead The Future In the 21st century, the game has changed fundamentally. And those who play the lone wolf game will find themselves on an island where they may die alone. The future of growth isn’t about creating the next big Great Wall of China, it’s about building the best bridges that help customers achieve the best outcomes. And the companies that understand this and implement this continue to find themselves dominating their niche markets. The metaphorical hands in these organizations will be used less for punching and more for shaking hands and closing deals. As a techpreneur and tech executive, you need to ask yourself - will you spend more time fighting wars or building alliances? The choice will define whether you thrive or merely survive.

This story contains new, firsthand information uncovered by the writer.

Amazon

Why Tech Rivals Are Also Each Others’ Best Friends: The Bizarre Truth Behind Software’s Competition

About Author

Comments

TOPICS

THIS ARTICLE WAS FEATURED IN

Related Stories

Becoming An Entrepreneur In 2021: Challenges And Strategy

How to Choose a Strategic Partner to Bootstrap Your Business

Metacade: What You Need to Know About Their Breakthrough Collaboration With Polygon Labs

Disrupting the Norm: A Tale of Love, Business, and Integration from a Power Couple

Growth Without Control Can Wreck Your Business

10x Growth in 7 Months: How we Invest by Developing Software

Becoming An Entrepreneur In 2021: Challenges And Strategy

How to Choose a Strategic Partner to Bootstrap Your Business

Metacade: What You Need to Know About Their Breakthrough Collaboration With Polygon Labs

Disrupting the Norm: A Tale of Love, Business, and Integration from a Power Couple

Growth Without Control Can Wreck Your Business

10x Growth in 7 Months: How we Invest by Developing Software

Light-Mode

Classic

Newspaper

Minty

Dark-Mode

Neon Noir

Minty

HN StartUps