Pivotal Strategies to Protect your Golden Ideas from Copycat Competitors
What’s the best way to deal with competitors stealing your ideas while you are growing your business? Originally appeared on Quora: the place to gain and share knowledge, empowering people to learn from others and better understand the world.
Years ago, I was fortunate enough to be involved in one of the of the most successful products in the history of the $63 billion Analog IC business: The product was the first single supply RS-232 IC ever: The MAX232:
The RS-232 IC market, at the time, had become a commodity market with none of the existing manufacturers including Motorola and National Semiconductor introducing any new products. Customers loved the MAX232 because it solved a problem that our competitors didn’t care about.
The MAX232 became a huge multi-million-dollar success overnight. We were the only game in town, but one of our competitors was right on our heels.
A little bit later, our arch rival, Linear Technology announced their own version of the MAX232, the LT1181. The LT1181 was, for all practical purposes, a copy of our MAX232. A customer could use either product without having to make any modifications to their design.
Linear did really well with their version of the product, but Maxim did incredibly well, building a $200 million/year business with all the variations and innovations we came up with.
Why did we do so well?
You Never Stopped Innovating When You Have Competition
It’s not enough to come up with a great product because your competitors will eventually surpass you. Indeed, Maxim’s success with the MAX232 eventually spawned 13 direct competitors including companies that were much larger than us such as Texas Instruments, National Semiconductor, and Analog Devices.
Yet we dominated the space with over 80% market share. The reason was we never stopped innovating.
We moved faster and quicker than our competitors, so our competitors were always at least one generation behind us. No matter how hard they tried, they never could catch up.
Then, You Have to Successfully Get Your Customers to Switch to The Newest Generation of Your Product
The driver, back in the day, of the RS-232 IC business was the growth of laptop computers. If you go into the way back machine, you’ll find that laptops used to have an RS-232 port.
Maxim dominated that business. In fact, every laptop manufacturer in the world, except for one Taiwanese holdout, used our products.
However, our larger competitors wanted a piece of the action. The secret to our success was a combination of innovation, marketing, and sales.
The innovation piece I already explained. Every year, I would travel to visit all the world’s laptop manufacturers which were primarily in Asia.
Our Asian sales director’s team knew the accounts cold. This made my job really simple.
“Ken” and his team would set up the meeting with the right people at each account. Then, all I had to do was explain how our new part was better than the old part, and the customer switch the business to our newest product.
The beautiful thing about this was it put us in the position where we had eliminated the competition because they were trying to catch up to what we were doing the year before. Our customers no longer wanted last year’s product. They wanted this year’s product, and we were the only ones that had it.
The Other Side of the Story: It’s Really Difficult to Catch Up When You’re Second
Linear Technology turned the tables on us in the RS-485 IC market when they announced the first CMOS RS-485 IC the LTC485. The LTC485, like the MAX232 before it, shook up a commodity market where there hadn’t been any innovation in years.
Linear’s product was so much lower in power than the old bipolar products from Texas Instruments and National Semiconductor, that they built a multimillion dollar high margin business.
We quickly developed our own version of the LTC485, the MAX485, and we came up with many other great new innovative products. We did really well with our products. However, Linear remained the largest player in the segment because they were first to market.