Exploit Your Unfair Advantages

How to win in a competitive market

Happy Saturday to the 7,063 builders, marketers and unicorns reading this newsletter.

Today's growth strategy is Exploiting Your Unfair Advantages.

We'll look at what makes something an unfair advantage, and how you can find yours now.

Even if you don't think you have one.

Time to read: 4 minutes

Difficulty level: MEDIUM

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"Every newsletter that's made it to 1 million subscribers or more has had an unfair advantage - some way to generate a huge amount of free discoverability to get their newsletter in front of a large audience."

- Louis Nicholls, Sparkloop

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Having top engineering talent can also be an unfair advantage.

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What's An Unfair Advantage in Business?

Unfair advantages are differentiators that can't be replicated easily by your competitors.

You may think that these are reserved for big companies with large footprints and massive capital, but you're wrong.

Before we talk about how you can exploit your unfair advantage, let's look at some more tradition ones.

Here are a few examples of unfair advantages in mature companies:

Pricing leverage: large incumbents have major negotiating power to get better prices and payment terms than newcomers. You will be at a disadvantage if you try to replicate their success using the same model, because you won't get the same terms.

Brand awareness: companies that have been around for a long time benefit from the "mere exposure effect". This psychological principle states that people favor the familiar. Given two equivalent options, people will choose the brand whose name is more familiar.

Domain authority: SEO powerhouses like Hubspot have accrued so much domain authority that they can easily capture additional search traffic for new topics simply by writing about them and passing internal link equity to the new pages. They will have a far easier time ranking new content than a website that's perhaps more relevant but has a much smaller backlink profile.

Unfair Advantages for Startups

If you're just getting started, don't worry.

You can find and exploit unfair advantages at any stage of your startup's growth.

To demonstrate this, I'll give a simplified timeline of how SmartAsset (where I've worked the past 7 years) has grown from $0 to $100M+ revenue and a few unfair advantages we've unlocked along the way.

Initially the company was simply an idea being explored by founder Michael Carvin and his technical co-founder Philip Camilleri.

Their goal was to build better financial tools for the public that would help people make better financial decisions.

Starting out, their only real advantages were their personal characteristics:

Relentlessly hard-working, intelligent and quick to iterate.

Their work ethic helped them produce a high quality MVP that showed higher product engagement than was common among competitors at the time.

This MVP won them entrance into the prestigious Y-Combinator accelerator.

Y-Combinator unlocked an unfair advantage (98% of applicants are rejected) by giving them access to some of the best advisors and investors in the world.

So even before they had customers or revenue, they were accruing competitive advantages.

Here are some other unfair advantages available to early stage startups:

  • technical skills - superior engineering can produce better products, faster (see Lemon.io)

  • natural talent - you can't replicate someone's inherent intelligence and drive

  • agility - iterating quickly in response to customer feedback is priceless

  • specialized expertise - do you know more about a subject than most people?

  • novel insights - do you have a unique vision of an intersection of tech and business?

  • personal connections - access to entrepreneurs, investors and potential customers

  • flexibility - not tied to a single way of doing things or product idea

Your advantages are only "unfair" (uniquely valuable) if they align with what the market wants and help you position yourself in a way that others can't.

Growth Stage Startup Advantages

As SmartAsset grew, we accrued several other unfair advantages:

$100+ million in funding: VC funding gave us the runway to commit to long-term product and growth experiments. Some of our biggest marketing channels took over a year to get profitable (at considerable expense). No competitor at the time was investing comparably into paid acquisition strategies.

SEO footprint: SmartAsset focused early on SEO and has continued to build on that. As a result, we have a domain rank of 82 and 2.48M backlinks per Ahrefs. This means we can now use that authority to defend and claim new organic traffic segments more easily than a new company might.

Network effects: as the largest marketplace connecting consumers to financial advisors, SmartAsset now benefits from having a broader network of advisors to match consumers with, which provides a better user experience. This in turn attracts more advisors due to the platform's growing name recognition and success stories.

How to Find Your Unfair Advantage

The examples above show that regardless of where you are in your entrepreneurial journey, if you're driven and committed then you can find an unfair advantage.

Unfair advantages generally fall into 3 main categories:

(1) Abilities & Skills

What you know and how well you can apply it.

(2) Resources

Capital, people, software, market share, domain authority, etc. These are assets you've accrued that provide leverage to accelerate your trajectory.

(3) Experience

Only you have your unique set of personal experiences. These can give you insights into business and life that others won't have.

The key is to stack unfair advantages in a progressive trajectory so they compound in a way that the market values.

For example, here is how this has played out in my own professional life:

  1. Joined Series A startup 7+ years ago and have helped it grow to $100M+ annual revenue.

  2. Used this startup experience as basis for writing about startups on Twitter and Linkedin, building an audience of 80K+ followers

  3. Now using this audience to generate subscribers to this newsletter

Whatever I do in the future, this base of skills, resources and experiences will provide unfair advantages to position myself for success.

Thinking about entrepreneurs I see building great businesses right now, I see people stacking unfair advantages in similar ways.

Here are two previous posts I've written that highlight a few examples of applied unfair advantage:

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✨ That's it for today.

-Brian 🦄

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