A better product is not always sufficient to help startups to win. This is counter-intuitive, so let me explain.
Many entrepreneurs get very excited when they identify weaknesses in the incumbent’s products,. They figure out a clever way of fixing these , and believe that because they have created a better solution, they will be able to use this magic sauce to win market share away from the market leaders.
They also believe that if they can sell it for less, this will allow them to earn even more market share.
This is flawed reasoning for 2 reasons .
1. If you can fix the flaw, so can the market leader. And they have far more resources to be able to do that efficiently ! They will catch up quickly.
2. Just like you were able to create a solution, other startup entrepreneurs will do the same as well, which means your magic sauce doesn’t really give you a competitive edge, and this can become a race to the bottom
Also, a lower price is an illusory advantage, because incumbents can easily drop their price in order to eat your lunch. They have far deeper pockets then you do !
Thus, even though your product maybe superior and cheaper, this won’t always translate into additional value which you can monetize !