If you’re launching a web startup, you’ll need to do competitive research. This article will tell you how to do it.

You’ll learn about 2 web sites that are your best source of competitive insight about new web startups. Chances are, you’ll want to bookmark these sites and add them to your collection of essential resources. But first, let’s consider why competitive research is important to any startup.

Why Do Competitive Research?

Conventional wisdom suggests that you should do competitive research for two reasons. First, as part of your business plan, to show your investors you’ve considered risks of competition and are justified in anticipating success. Second, by looking at what others are doing, you’ll refine your mission, your market positioning, and your product’s feature set. But there’s a third reason to do competitive research. One that’s more important than the others. A reason that is so important, you must do it as early as possible in your planning.

If you’re going to launch a new business, you need to find similar established businesses. Here’s why.

If you can find an existing business that others know about, it’ll be easier for others to grasp your idea without seeing it fully deployed. Whether investors, business partners, or anyone else, it’s easier to explain what you want to do if you’ve got a common reference point. Are you launching an online auction site for the produce industry? Tell them, “It’s eBay for truckloads of tomatoes.” Find a way to define your objective by describing it in contrast to others.

The best reason for doing competitive research is to make it easier to describe your project to other people.

How Special Are You?

Here’s what’s difficult. Most people want to be special. How about your business concept? Is it totally unique and special? If it is, you’ve got a problem. Either you haven’t done your research to find similar businesses. Or your business concept is truly unique, which means it’s going to be very difficult to explain and market. Ideally, your business concept is sufficiently similar to existing businesses that people will easily recognize it. And unique enough that it is defined by contrast with others. If you can’t find anyone doing something like you, look harder. Or else you might be in trouble.

How To Do Competitive Research

If you’ve already identified a well-known business that is similar to yours, you’ve got a head start. If not, you’ve got to do preliminary research. Start with keyword research. Define your keyword universe (see my article How To Do Keyword Research). Use Google to find related sites. As my article suggests, use SpyFu to see if any companies are advertising with the keywords that relate to your business.

Once you’ve found one or two possibly similar companies, try searching the following databases of startups. These are the sites that provide a definitive index of all the startups that are launched or recently funded (and some that are still in pre-launch, as well!).

Company information would appear to be a new battleground in the tech blogging space with relative new comer VentureBeat Profiles taking on the TechCrunch owned Crunchbase. As of this week (at least I’ve only just noticed) VentureBeat Profiles company widgets are now appearing on Mashable. So what’s on offer?

Information

Crunchbase and VentureBeat Profiles are immediately similar in the information they provide, to the point that Michael Arrington has previously described VentureBeat Profiles as a Crunchbase ripoff. It’s a fair call only to a point: it’s easy to argue that Crunchbase is really a well formatted free version of Killerstartups, and all share similarities to Wikipedia as well. Ultimately all are information products based on databases, and databases have been around since at least the 60s.

The key difference is in how the information both have is submitted. Crunchbase is a TechCrunch controlled database that takes user suggestions (every submission must be approved) but primarily is added to via TechCrunch employees. VentureBeat Profiles on the other hand is a user generated wiki combined with auto generated information.

People can spend hours arguing of the merits of one model or another, but it ultimately comes down to the wisdom of editors vs the wisdom of the crowd. On comparison might be Encyclopedia Britannica vs Wikipedia. TechCrunch is on the record saying they would be moving to a Wiki style model, although this was originally promised for March.

CrunchBase

If you’re launching a web startup, get serious and check CrunchBase. It’s a project run under the wings of the TechCrunch blog, which is the closest thing to a trade magazine (or gossip column) for the web startup industry. The CrunchBase staff closely watches SEC Regulation “D” filings to track newly funded tech companies. CrunchBase is not complete (the newest and unfunded startups are not represented) but it’s got great profiles of all the web startups that have received significant venture capital funding. You can search CrunchBase by keyword or company name.

The best part is the CrunchBase “Competitors” coverage (in the lower left corner of any company profile). Find the profile of any company you know about and you’ll find all the similar companies that have received venture funding. With each CrunchBase profile, you may find a different set of competitors. Browse them all to see how the CrunchBase contributors view the competitive environment.

VentureBeat Profiles

VentureBeat Profiles is another “crowdsourced” database of startups. You’ll find spammy and adolescent garbage mixed in with the real companies because VentureBeat Profiles relies on volunteer submissions, but the real startups are there and it can be a gold mine for competitive research.

Use the VentureBeat Profiles Advanced Search feature to search their tags for your keywords. When you find a company profile, take a look at the “Similar Companies” box (middle of the right sidebar). There’s a link to “View All Similar” that will display “Competitors”, “Related Companies”, and allow you to compare the web traffic of any competitors.

Social

One definite advantage VentureBeat Profiles has is that in being generated by users it offers social features as well. Users can vote up or vote down companies (bullish or bearish) and have discussions around companies and news relating to the company. Users also get profile pages and can add companies to a watch list.

The argument against this is whether company profile information is compelling enough to support a user community. I don’t have figures from VentureBeat Profiles but it would appear that the answer so far is yes, least there was a reasonable level of recent activity (25+ actions) in the hour leading to me checking the page. The site also offers forums and job boards as well.

Widgets

The key battleground for Crunchbase and VentureBeat Profiles may well be with company information widgets. Crunchbase was the first to offer info widgets, but VentureBeat Profiles now offers more flexible options.

Crunchbase widget: no customization options. Does resize though to fit page

VentureBeat Profiles: customizable, with users able to remove headlines or detailed information, or even add more detailed information. For those who don’t mind a little coding, there’s a customization page explaining how the widget can be customized even more. The obvious negative: width isn’t a variable and it presents in the one size (at least at the time of writing).

Reasons to Use Widgets

I’ve used Crunchbase widgets here on The eNewsz before as a value add for readers wanting to find more information about a company featured, however one thing holding me back has been the inability to customize the widget to fit (they’re rather large, and don’t sit nicely on the front page). VentureBeat Profiles has width issues but I can shrink them down so they become somewhat more appealing. However both lack compelling incentives aside from offering information to your visitors to actually use them.

Crunchbase lists sites linking to each Crunchbase page in the right hand sidebar of each entry (and by linking this is 99% of the time someone using the widget) and yet the links are tagged link=nofollow in the sidebar where as the Crunchbase widget links are not: they want the Google juice but are not willing to share it back.

VentureBeat Profiles on the other hand doesn’t offer automated links back, but through its community submissions does list links to relevant external content, without placing Google condoms on the links. However this is not tied into the display of VentureBeat Profiles widgets so there is no direct incentive to use one.

Where VentureBeat Profiles gets interesting is with their Mashable deal, where VentureBeat Profiles offers a co-branded page, in this case the interestingly named MashCoInfo (Pete, what were you thinking?). Mashable gets its own Crunchbase style service powered by VentureBeat Profiles and VentureBeat Profiles presumably gets more traffic and new users. I have no idea if money changed hands but I did ping VentureBeat Profiles about cobranded sites and they let me know that they are done on a site to site basis. I won’t lie: it immediately has appeal as a value add for The eNewsz, as I’m sure it may well do for other tech sites.

A Final Thought on Competitive Research

With the tips offered here, you should have no problem identifying your closest competitors. Don’t be arrogant; exercise humility and make the assumption that these competitors are at least as smart as you and that they know what they are doing. Don’t just dismiss them. These are companies that have poured resources into something very similar to what you want to do; make an effort to learn from them.

Want to help others with a suggestion? Or let me know this was useful? Leave a comment. Thanks!

a Full-Time Blogger & Entrepreneur from Calicut, Now working as the CEO of eNewsz.com

Jasir Javaz

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