A few weeks ago Techcrunch published an article about a startup that got seed money from a well know group of VC’s. And because this startup is working on a similar concept that my team and I are developing, it got my attention. I immediately sent it to my crew. Their reaction was interesting. Basically they thought that that was it for us. That we got beat to the punch. That we had spent a good amount of our time working on this and that now we got beat.

Ummmm….No.

Here’s the thing. We haven’t gotten beat and nobody’s won because even they don’t know what they have yet. Heck they’re still in beta. If anything, seeing that they got seed money and seeing the comments that people left on the article validates our idea (which also helps us show everyone else that we’re not so crazy!). Another thing is that their market entry concept is our minimum marketable feature concept. In other words we have a completely different vision but had to simplify it to create the initial prototype; which is what they have.

But there’s another reason not to get down…

It matters how you play the game.

There are countless stories or startups that came up with the original idea but were beat later on by a late entry. How many people remember Friendster? How many people remember MySpace? Where are they now and who’s the King of the Hill? Facebook.

Another recent example is Groupon, which has spawned thousands of copycats all over the world. Though Groupon has a lot of money in the bank and is the market leader, it’s dropped the ball in how it resolves customer issues and is having trouble making the business model work for customers. And, competitors such as LivingSocial have preyed on Groupon’s mistakes.

There is no clear view of how that business is going to play out yet.

Another late entrant was Apple. Everyone seems to think Apple was the first one to come up with the iPod. Well, they were not. They merely improved on the Sony Stickman, added iTunes and voila! A new platform is born.

So there you go.

Competition is rivalry between business models

What matters is getting the business model right. Sure, Google wouldn’t be Google if it didn’t have a better search engine than Yahoo and other alternatives. But it would not have gotten to where it is if hadn’t figure out the business model that powers it’s innovation engine.

That’s when everything changed.

The same thing is going with the business model experimentation that is going on with social networks. We’ve got a long way to go!

It’s more than just about technology

I have a friend who’s a manager at a Victoria’s Secrets retail store. She recently told me that VS is making some policy changes in how it deals with returns and how it hires people. They want to hire people who are friendly because the problem is that sales associates are not very nice with customers. These customers then call customer service to complain. She says that what customers complain about are things such as cashiers not smiling, not looking at people and talking very fast.

This is basic stuff if you ask me. Here’s another example from a few days ago.

Last Friday I was in Tijuana and stopped at a bank (foreign to my account) to withdraw some money. Apparently the ATM machines were not working properly, they were having trouble giving you money. I had to try two times to get money. The first transaction was charged to my account even though I didn’t actually get any money. I did this in front of an ‘executive’ who told me that I would not get charged. I asked him if he was sure to which he responded nervously, started stuttering and got red in the face; a sure sign he’s just following protocol.

I was skeptical and told him I would come back later after I had checked my account activity online. He was wrong of course. I did get charged. I went back to the bank to get ‘my problem fixed’ to no avail. I got ignored and was told to talk to my US bank to get this fixed. Frustrated, I called Bank of America to get some answers. The gentlemen who answered the phone was friendly and courteous. He asked me questions about my problem, a clear sign of empathy. He acted like a human. And though my problem is still not resolved, he answered my questions and told me exactly what I needed to do.

I got my problem fixed today. All it took was 5 minutes.

Perfect.

Situations like these are common and most of the time are the difference maker in the interaction we have with a business. Technology takes center stage as the killer app, but let’s not forget that humans (most of the time with no technological background) are our customers. Not robots!

Being first doesn’t necessarily mean being relevant

It’s easy to get caught up with emotions because some other startup appeared on TechCrunch before you did. It’s the nature of this thing called entrepreneurship. But just remember one thing:

Startups don’t become relevant by focusing technology, they become big businesses by focusing on being better humans.

And it’s the big businesses or the startups that seem to think ‘they’ve made it‘ that consistently forget this simple principle. So, this leaves us with: It’s matters less if you are first if you are not relevant.

Thoughts?