When you start a business in an emerging market segment, chances are you’re trying to solve a problem that a lot of other people are trying to solve at the same time.

As we’ve hit various milestones in our development process at ClickMarkets (www.clickmarkets.net), and the closer we get to market with our WideAngle metrics product (an online software designed to manage the vast world of social media for businesses and organizations) there seem to be new competitors popping up every day with brand-new solutions.

You can write it off as healthy entrepreneurial paranoia- but this anxiety about whether our cake is good enough to win the bake-off, or whether we’ve been toiling away on something mundane--has actually prompted me to codify when we will take a deep dive evaluating a competitor, and when we will ignore them.

We’ve been working on our software in stealth mode since early last year. It’s been a thoughtful process: First, we worked with real customers to document needs and best practices, then developed manual processes and reports to test out the value proposition. We tried to mitigate risk by selling the manual reporting service to measure market demand and price sensitivity before we wrote a line of code. Then, in the fall, we took the plunge and began designing databases and user interfaces, and hired the right developer. In the last month, we’ve began to use the product internally for our social media customers, and are now finally going into quality and security checks for a broader release, doing demos.

Every time I’ve been in this prelaunch position, the same nagging thoughts arise: What if someone else’s product has more pizzazz? More usability? More value? More of that certain hip “je-ne-sais-quoi” that takes it viral? That certain something that just makes it smell like a winner? Sometimes I even let my mind wander a little further: Even if the competition isn’t better now, how much cash, how many connections, how many smart people do they have, that may allow them to close the gap faster? If I’m trying to build a leader in a segment, I should worry about that stuff, right?

Generally, my philosophy is to serve the customers you have extremely well; satisfy them; listen deeply; respond; work hard- and don’t worry too much about the competition.

There are two major categorical exclusions, where we really do pay attention:

The obvious one is Sales (companies we will run into directly in the sales process).

Another less obvious reason we look at competitors is so we’re not blindsided by something that could stop us from Winning Big. So often, the winner in an emerging market is a matter intangibles (who knows who, who architected for a sale, who had better PR). If I have a better-funded competitor, they may not only beat us on deals, but they could get my VC money, hire better people, or simply create market/buyer uncertainty even if the product is worse.

With that in mind, for the startup phase, here is the approach we’re applying to “competition watching.”

We monitor the competition by running programmed searches of social media, news feeds and blogs from our industry, as well as venture blogs and the web at large. The terms we search include company names and keywords and phrases. Because we have a small staff, we review these every couple of weeks to see if there’s anything new we need to know about.

If there is something new, we do a quick scan of their web presence and put them in three buckets:

• Barking-at-the-Gate (same target market, same problem, same go-to-market approach)
• Neighborhood Dog (differs on one or more of the above criteria)
• Cat (not a competitor, may be a partner, knows something about our segment)

We do a deep dive on the Barkers, from a sales and product development perspective. Here are the questions we want to answer:

• Will we overlap in the marketplace in the short term? As a startup, I want to know if we’re going to run into them in our early sales calls, so I can have my answers ready. One of the first screening questions in deciding to invest in digging into a potential competitor is: Does this company appear to be going after the same type of customer? If we’re selling to small and medium sized businesses and agencies and this company is reaching out direct to big enterprises, they are not going to get my attention right now. If they are selling to a different market, I may take a moment to think about why they pitched that segment and its value, and whether there’s any reason to put that in line for later evaluation.
• Are they trying to solve the same kind of problem? If not, we may take a cursory glance at the way they are positioning, to understand what aspects of the problem they might have seen that we haven’t seen. Sometimes, someone will approach the same problem with a totally different lens. What can we learn from them? Have they been able to solve a more difficult problem than we have?
• If the company is still looking like we need to take notice, we’ll go a step further, and ask: Are they credible? Who’s behind them? How user-friendly and design-savvy is their self presentation? We may look for evidence of credibility from the market, too. What’s the trend and tone of their mentions in social media?

If we are still going and the prospective competitor hasn’t been dropped into another category by this stage, then someone is going to have to do some work, and that someone will be sales support. The question they are looking to answer is:

• What will a prospect see, and how will we respond if this competitor comes up in a call?
• What are the strengths and weaknesses of the product /service offering a prospect might see neck-in-neck with our offer? What’s good about them, what’s weak? What about pricing? Is there anything in the marketing language that we need to be aware of? If possible, this is the stage where we do a free trial (of the competitor?) and evaluate the offer. Are there any features that could be dealmakers that we’re missing?

Mostly, I just want to know my own customers, know what they need, focus on what they need, and solve their problem in the most elegant way. But never to the point of refusing to learn by what other creative problem solvers are putting out there. We’re in the final days of core development now, stay tuned.