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Identifying Existing Alternatives

Existing Alternatives

So, you have identified, listed, and described your customer's top 3 problems through structured Problem Interviews. Now your next step is to assess how are your customers solving those problems today - or in other words identify the existing alternatives.

Ash Maurya writes:

Your true competition is NOT determined by who you think they are, but who your customers think they are. This is something you uncover from your customers, not through a SWOT analysis. Once you understand the existing alternatives your customers hire today to get their jobs done, by all means anchor, price, and position against these existing alternatives which is the most effective technique for getting customers to switch to you.

Persevere in following the Lean Startup Method, and resist urges to list your well-known competitors and call it quits. Instead, concentrate on interviewing your customers. Prepare a set of questions which try to answer following:

  • How are your customers currently addressing their problems?
  • What products or services are they using?
  • Are they putting a lot of effort into making their alternative solutions work?

If the problems you identified are relevant, i.e. painful enough, your customers will have already found out some way to solve them. Furthermore, if you find out that they are investing a lot of resources (effort, time, and money) into making their current solutions work it is a good signal that you have identified painful problems worth solving.

An Example - Dropbox

Dropbox, a web-based file hosting service founded in 2007., by MIT students Drew Houston and Arash Ferdowsi, as a startup company from the American seed accelerator Y Combinator. Their initial hurdles were covered in Forbes. This is how Dropbox looked like in 2007.:

Dropbox in 2007

But in 2007 they were far from being the first ones in the web-based file hosting service arena. Earlier entrees include Box, Windows Live SkyDrive (OneDrive today), and SpiderOak.  Were those the only existing alternatives? Did their customers have other ways of dealing with their pain points?

At that time their customers indeed had other widely used alternatives, like:

  • online file hosting services like RapidShare and Megaupload,
  • peer-to-peer file sharing networks like eDonkey, Shareaza, DC++, and SoulSeek,
  • File Transfer Protocol client software like FileZilla and WinSCP, and
  • e-mail.

As we can see, interviewing our customers can reveal a lot about our true competition, including solutions that we would easily dismiss while brainstorming on our own.

Relation to the Lean Canvas

Lean Canvas - Existing Alternatives

Existing Alternatives is a sub-section under the Problem box. When completed it should clearly show how your customers deal with your identified problems today. It also represents your true competition, and is a place for your competitors on the Lean Canvas.

Remember - your job is to find a better way to solve a problem than the existing alternatives!

Existing Alternatives is one of the Experiment cards in our Social Media scenario

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