You may first think of potential digital competitors in a certain market, such as retail, healthcare, education, media, finance, sports, clothing, transportation, etc. But what about potential analog competitors?
“Analog” companies are those well-established companies that were formed in the pre-digital age and have succeeded with analog products (off-line products) for decades. Many of these companies are publicly-traded companies on stock exchanges and, as you now know, file extensive and detailed reports about their views of their market and themselves.
You should be making full use of SEC filings made by public companies in order to better understand how these companies think about a market or industry.
If you plan to develop a tennis racket with a tracking sensor in it, for instance, you should look up the public filings of the companies that have been successful manufacturing and selling traditional tennis rackets. You can learn the dynamics of the tennis racket market by tapping into the knowledge of a potential competitor with analog tennis rackets. Their outlook of the future of the market may give you valuable insight into the opportunities among customers. And if the analog company sees the tennis racket market growing, it would be a positive sign for you.
Even though you may be focused on the development of the digital solution, you should not discount the lessons you can learn from analog competitors. If you plan to develop a duress badge for nurses to have a way to alert security of a threat, you should look up the filings of public companies that sell in the healthcare market, so you can know what affects purchasing in hospitals. Find the public companies that are in the market of your interest.
It is vital for you to learn as much as possible how they operate in the market. You can find useful information about how they charge customers; what are the risks they face; what kind of business investments they make; what are the buying cycles of customers in the market; what are the ups and downs of the industry; how they price products and services; how they promote and market products and services; how they are evolving, and more.
You will likely discover that many analog companies are digitizing their businesses, so you will want to pay attention to their efforts in this regard, too. They may be adding digital capabilities to analog or physical products, or they may be developing completely new digital products from the ground up, leveraging the cloud. You should also pay attention to what kinds of smaller companies they are acquiring.
If your idea for a startup is built on artificial intelligence and then you uncover from an SEC filing that analog company has not only invested millions of dollars in AI, but also recently bought an AI company, then you’d want to pay particular attention to the digital evolution of the company. You may even be able to benefit from some early market feedback that the public company communicates publicly before you jump into this market segment.