What Makes A Start-up Successful In A Red-ocean Market?

If you want success in a red-ocean market, your product needs much more than just a cool feature set.

Products that dominate a market usually build on some unfair advantage that's hard to copy, leaving the rest of the field biting their dust.

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Some of these advantages are part of the "long game" (but are only activated via smart short-term strategies)

Tall Barrier to Exit

A functional system that naturally balloons in value with more usage considerably raises the switching costs. In this case, data porting & re-training becomes a horrific thought for customers.

Ex: HubSpot, Marketo, Mailchimp. The more sales & marketing activity a customer registers on their accounts, the harder it is for them to migrate even to platforms that cost half the price.

Economies of scale

A product that can afford to offer a competent service at a trivial price point due to scale is quite difficult to replicate.

Ex: Amazon AWS, Dropbox and Netflix are able to keep their prices fiercely competitive making it super difficult for smaller incumbents to step foot in their markets without serious seed dough.

Network effects

Once a significant population with high activation index is established on a platform, a mass exodus to a newer competitor becomes super hard.

Ex: Craig's list, Airbnb & Facebook Marketplace are immovable juggernauts because of their sheer critical mass.

Again, the above attributes are "long-term" product advantages.

There are other tactics that potent startups have adopted that are equally hard to copy

Rare Talent

Getting together a team of cutting-edge subject matter experts or influential/experienced leaders in their field isn't easy to mimic.

Ex: Google's biggest asset starting out was the Sergey Brin & Larry Page duo - both leading researchers on large-scale hypertext search.

Similarly, Netflix edged out competition due to the Hastings, Hunt & McCord powerhouse combination.

Ambassadorship

Capturing the backing of a prominent investment firm, accelerator or personality can catalyze growth & give you a head start.

Ex: YCombinator's support of startups like Stripe & Coinbase helped them make inroads in financial markets due to inherited trust.

Similarly, Drake-backed Wealthsimple & Jordan-backed Vanilla are able to leapfrog competition in terms of visibility (not necessarily quality) due to their prominent support.

Branding

This is perhaps the one crucial (truly) differentiating activity that can be worked on from Day 1, yet is often ignored.

Developing a brand image that gravitates users, oozes trust & resonates authority is priceless & simply difficult to imitate.

Ex: Slack is not just a great multi-device collaboration app. During it's ascent, the early adopter community gave it a cult status that upshot its fame and traction. SadaPay is another great example.