So there we were…having an interview call for the second round of a startup award that we had gotten shortlisted for. Things were going pretty well until one of the jury asked the dreaded question, “What is your key differentiator?” Yes. You read that right. Game Over. K.O.
We (my co-founder and I) looked at each other, grappling with the answer, knowing full well that whatever we answered wouldn’t be enough. We firmly believe that our customer service and the way we deliver it truly sets us apart from the competition. But that fell on deaf ears. Can customer service actually be a real differentiator for a service startup?
We then lurched to the time old tested reply of, “We are the cheapest in the industry” (we really are), but the jury felt underpricing is more of a drawbridge than a moat. Essentially something that attracts the user to you but not something that makes him/her stay. Moreover it is something that is the easiest for a competitor to copy.
Which led us to the third option, technology. Yes! We had it. Our technology was our differentiator, we said. Surely that must do the trick, throwing around jargons like “Mobile First” and “Exponentially increasing usage/penetration”. Against the backdrop of the industry which we operate in – Finance – highly regulated and antiquated in terms of technology, with standard white label solutions being the norm, including us for now.
Which leads me to ask the question, “What really counts as a differentiator for a startup?” Do investors and investor sorts ever stop for a second and consider the effort it takes to just setup a working operation. From scratch. That founders might just be too busy in any of the operational tasks from making sure that the broadband doesn’t disconnect to employee retention to ensuring customer support levels. And isn’t traction, a recurring revenue stream and month on month growth enough, at least for the initial years?
And does the consumer really see a differentiator, even if one might exist? I, like million others, order books online. And the only differentiator I see between Flipkart and Amazon is the price (including delivery) and I naturally order from wherever is the cheapest. Where is the moat there?
Or take the case of India’s three biggest private banks – ICICI, HDFC and Axis. What is the differentiator between the three in terms of a savings bank account for a retail client? All three are present pan India, with more or less the same FD rate, the same RM policy and the same brand trust.
Is “The market is too big to worry about competitors” the right answer in some cases?
-Siddhant, Co-Founder & COO, SAS Online
of the week!!