Pittsburgh Ventures

I am presenting at a new media conference in Columbia, MO, in March.  The organizer teaches a class in entrepreneurship, and he asked me how my firm thinks about competitors to the portfolio companies we invest in.

The only way to understand competition is to read as much as you can and stay on top of the information sources that matter most. Even then, you will be hard-pressed to fully understand the competitive landscape, since it is changing so much, and in many cases, is not as transparent as you might hope (for various reasons).

My top information sources are:

• A VC – Fred Wilson is the smartest venture capitalist I read; realistic while forward-looking as anyone else you can read.
• TechCrunch – Overall best tech/startup news source with good, original thinking included.  CrunchBase database very rich.
• LifeHacker – Gadgets, hacks, etc.  Good for trend following.
• Chris Dixon – Another smart forward-thinker, this time from an entrepreneur’s angle.
• Paul Graham – This is the RSS feed of Paul Graham’s (YCombinator) blog.
• Mashable – Second best tech news source.
• ReadWriteWeb – Third best tech news source.
• Wired – General good tech coverage.
• TED Conference Talks – Videos of world-leading thinkers in a variety of fields – mostly R&D.
• My “Filtered” Twitter List – My “must read” daily Twitter list – this includes most of the links I read in a day.

This is my “Top Ten”, however my Google Reader has about 150 different sources in it, and grows and changes by the day.

When our firm is in our Diligence Phase, we spend 30-60 days really digging deeply into a company and an industry. We talk to a bunch of people who we think can give us good intelligence about the company we are about to invest in.

Understanding competition is very important, and has lead us away from some very “frothy” industries/spaces where the slices of pie are likely to get too small.  During diligence, we have even walked away from a signed term sheet because further investigation has turned up more competitors or differentiated technology and IP than we are comfortable with.

So in the end, it just comes down to time and hard work – and that still doesn’t get you all the way to bright. There will always be competitors you miss, but you just hope you don’t miss any really big ones.