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How Startups Can Thrive Against Fierce Competition

This article is more than 6 years old.

A company’s competitive advantages can evaporate quickly. In fact, a notable example is Snap. The company has been flat-footed in battling Facebook, which has leveraged the Instagram platform. True, this has been mostly by knocking off Snap features! But hey, the strategy seems to be spot-on.

In light of all this, what are some lessons for entrepreneurs? How can you deal with an intense competitive environment?

Well, to help provide some actionable advice on this, I reached out to the CEO of Criteo (CRTO), Eric Eichmann. He certainly has demonstrated his abilities to deal with competition. After all, his company is now one of the leaders in the ad-tech market, which has seen plenty of implosions, broken IPOs and bankruptcies.

For Eric, the key to winning against the competition is to set forth a clear vision of the company. “Early on,” he said, “we saw ourselves as a technology company that leveraged data to help our customers drive their sales.”

For the most part, Criteo would pool together enormous amounts of ecommerce data and then process this to allow for targeted advertising. “We did not seek out hot markets or big customers,” said Eric. “We would instead look at where we could be a fit for data and sales.”

This meant quite a bit of ongoing innovation. So over the years, the company would go on to optimize for such things as the cost of sales, basket sizes, conversions, mobile and dealing with cookies.

But of course, the process was still messy. “You need the ability to kill ideas when they do not work,” said Eric. “Amazon does this well. The company takes many bets and is not afraid to cut the ones that do not gain traction.”

As for Criteo, an example of this is when the company started using Beacon, which is a device for retail stores. “For a year, we ran tests and pivoted a couple times, but we had to make the tough decision to stop the effort," said Eric.

Oh, and then there was the time when Criteo bought an email company that provided services for retargeting. Yet as it was rolled out to other countries, it became very clear that the service would not scale. “It was dead weight and there was not enough business for it,” said Eric. “So we shut down the unit."

OK then, what to do when you have a Facebook-Snap scenario? How do you deal with a mega player coming directly at your company?

Interestingly enough, Criteo has had first-hand experience with this. When the company was much smaller, a mega tech operator made a play for the core retargeting business. It bulked up on engineers and spent a tidy sum on promoting the service.

“When you are the target of a competitor,” said Eric. “You need to look at things on two levels. First, does the competitor have the right premise? That is, does the company understand the dynamics of the business? If not, then you have an advantage.”

But unfortunately for Criteo, its rival did understand the category – focusing on the metric of performance.

Because of this, Eric realized it was about going all-in on making the best product as possible. And while the fight was tough, he still had some key benefits, such as a loyal customer base and large data sets.

“The other thing is that your team is even more motivated to fight and win,” said Eric. “And this was definitely the case with us."

And yes, in the end, Criteo would ultimately prevail, with the market cap hitting about $3.2 billion and the growth ramp continuing at a solid pace, up 33% during the latest quarter.

Tom Taulli operates a tax and accounting firm, which focuses on small and mid-size growth companies.