Why copycats are the best thing to happen to your company

By Brian Wong , written on February 19, 2014

From The News Desk

No matter where you went to high school, I’m willing to bet there was one constant. When it came time to take a test, eyes had the frequent habit of wandering where they shouldn’t have. Maybe you were the target, or the one taking a peek. Regardless, the end result was that when it came time to turn in the test, someone had taken advantage of someone else’s hard work and called it their own.

Does this still sound familiar today? It should.

In Silicon Valley, the reward for trailblazing with true innovation is often a trail of “copycat” businesses following closely behind, seeking to profit from your idea. Sometimes the copycat is dead on arrival (see: too many examples to list here). Sometimes it pays to be the copycat (see: Germany’s infamous Samwer brothers). And sometimes the copycat goes to court (see: Samsung).

As someone who has had this happen multiple times to my company, I am no stranger to this form of “innovation.” But those experiences have helped me look at this much-maligned trend in a new light and shaped an opinion that many will likely disagree with – copycat businesses should be welcomed. Embraced, even. After all, what is a copycat business other than evidence that you’ve created a solution that taps into and services a real need?

Take Snapchat, the Valley’s darling du jour, which has set the precedent for disposable instant messaging. In late 2012, Facebook launched Facebook Poke, a messaging app possessing an eerily similar feature to Snapchat’s signature disappearing act. A year later, after Poke didn’t pan out, came the $3 billion offer. But Facebook actually ended up being its own worst enemy here. Their cloning attempt had the opposite effect on Snapchat – instead of feeling intimidated, it increased Snapchat’s confidence in what they’d built. They now knew that their DNA wasn’t just something others could transplant and call their own.

Only time will tell if they made the right move, but it underscores the importance of concentrating on the road ahead, not who’s lurking in your rearview mirror. Copycats have no visibility into the inner workings of your company or what you have in store. No matter what, you’ll be ahead of the curve because they can only replicate what you show them. In this sense, objects in mirror are not closer than they appear – they’re months behind you.

Case in point: For round two, Facebook unveiled Instagram Direct for private photo messaging. The problem? While Instagram was hard at work developing this service, Snapchat was introducing Snapchat Stories, a feature that extended the message expiration to 24 hours. Again, it illustrates the power of being confident in your vision, your team and your business. Instead of wasting time going on the defensive (something Fab fell prey to), Snapchat propelled itself forward by blocking out the surrounding noise and ignoring what others were doing.

When surveying your market, be careful not to confuse copycats with competitors. Ask, does the company in consideration strike fear into your heart? Or does it rely on the inspiration of others (including you) to “innovate”? Remember, a copycat is a pale imitation of your company, a competitor is an innovator that challenges your market share in a meaningful way. A concept and a business model can be mimicked – execution can’t.

Look at Tesla. It’s easy to forget that electric vehicles were a fringe product before they arrived. Just eight years ago, there was even a documentary released called “Who Killed The Electric Car?” Then a California startup gave car companies a rude awakening and beat them at their own game. While the industry is finally catching up to the technology, Tesla’s huge head start on innovation enabled them to focus on delivering other value propositions, like expanding its Supercharger network or achieving unprecedented safety ratings.

Although we may expect the opposite to be true, real competition is indeed healthy. It serves as a reminder that you’re not only the only one playing in the sandbox. To stay nimble, some have even taken the unconventional approach of assisting in the creation of copycat companies.

A famous example is the story of Taco Bell founder Glen Bell starting a direct competitor by leasing a taco stand to one of his employees. (Can you imagine how that move would be greeted today?) In Southern California’s emerging fast food market in the 1950s, hamburgers were the menu item of choice peddled by restaurants we now know as McDonald’s and Carl’s Jr. Fast food tacos were new to many Americans, so new in fact that very few even knew how to pronounce “taco.” The simple presence of a competitor helped educate consumers and build the market faster for both companies. That taco stand next door? Maybe you’ve heard of it – it’s called Del Taco.

All this isn’t to say that you should let blatant imitators bleed your company dry or patent trolls stifle your innovation. Be sure to build defensibility into your brand and don't forget that sometimes plagiarism is illegal and you need to “tell the teacher.” Consult with your lawyer to determine the best course of action.

Ultimately, the strategy that wins out is to be your own architect. Losing sleep over copycats stealing your business model and making reactive decisions to squash them lets them win. Worse, it taxes your team in their efforts to make something truly great.

We all know imitation is the sincerest form of flattery, but can’t it be a form of validation as well? I certainly think so.

[illustration by Brad Jonas for Pando]