Competition is the best soil for a company's survival

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In a speech, Jack Ma discussed Alibaba's relationship with Tencent, stating that without Tencent, Alibaba would not continue to adjust and improve itself. He emphasized the importance of having such competitors to remind you of your position.

I often share the viewpoint that "a good competitor is the tonic for business development." External competitors not only prevent a company from falling but also make it stronger. This principle applies to any competitive arena: in the Olympics, world championships, or any gathering of top athletes from around the globe, it's the intense competition among them that leads to the continual breaking of world records.

Returning to the business domain, the achievements of internet giants like Alibaba and Tencent are not only due to the relentless spirit of their founding teams but also owe much to the pressure from their competitors, which has been transformed into an external driving force for their development. Self-motivation, coupled with external impetus, has led both companies to continuously iterate on their products and optimize their architectures, breaking limits time and again to surprise the market: Alibaba, starting from an e-commerce platform, has now developed a comprehensive layout encompassing information flow, fund flow, and logistics; Tencent's business has gradually expanded into advertising, entertainment, finance, and investment, far beyond the simple definition of a social media company, constructing a vast corporate ecosystem.

Competition drives the growth of excellent enterprises, but the beneficiaries are not limited to the companies themselves.

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1. The competition between Nokia and Motorola is equally well-known. Motorola, founded 94 years ago, produced the world's first mobile phone. During the era of feature phones, Motorola and Nokia engaged in a silent competition, bringing forth a series of impressive products. Motorola's early product, the RAZR series V3, achieved classic status with its ultimate design sensibility. Nokia's 8110, with its innovative slider design, was a groundbreaking achievement at the time, even though it was priced at over eight thousand yuan, it was still sought after by a large number of consumers. Both sides continuously introduced better products and services, improving the overall standards of the mobile communication device industry and bringing more convenient communication methods to society as a whole.

 But remember, only companies with sufficient strength can obtain entry tickets to this competition. In other words, companies must first be excellent themselves in order to grow and benefit from competition. The ultimate reason for the failure of companies that withdraw from the stage due to a little resistance is most likely not due to direct competition, but rather because the companies themselves have more or less problems that have not been given enough attention. Rather than being a bomb, competition is more like a fuse, accelerating the exposure of problems, forcing crises that are hidden to surface, and then destroying what appears to be a strong enterprise.

 Although Nokia and Motorola dominated the communication industry in the early 20th century, they performed less impressively in the later smartphone era. This is because neither Motorola nor Nokia broke free from the constraints of the previous era in terms of design philosophy, remaining rooted in the telephone-centric paradigm. Apple, on the other hand, broke free from this paradigm, viewing the phone as a "personal mobile multimedia internet terminal," with "calling" being just one of its functions. Therefore, when faced with the newly emerging Apple at the time, the two giants were unable to resist and handed over the market. 

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2. While industry-level competition brings external pressure to companies, it also drives the advancement of societal technology. Effective competition within companies can elevate their standards to a certain level, laying a solid foundation for external competition. 

When powerful companies dominate the market, their confidence stems from their own strength. The source of this strength lies in the countless accumulations made behind the scenes, as companies continuously challenge themselves internally and reap the rewards of internal competition.

As one of the assistants during the 1992 presidential election of Bill Clinton, George Stephanopoulos, the Washington bureau chief of the American Broadcasting Company, wrote in his memoir published in 1999 that under Clinton's leadership, everyone in the White House team was engaged in mutual competition. Clinton had a unique habit of assigning overlapping tasks to different subordinates when delegating assignments. This unconventional approach inspired the White House team to be proactive in their work. When faced with the same problem, different people would offer their ideas from different perspectives, actively contributing and brainstorming. Through the clash of ideas, the most mature and refined solutions would eventually emerge.

The same principle also applies to internal management within companies. As any organization develops to a certain extent, it gradually loses its drive for growth. An effective competitive mechanism serves as a great incentive, enabling enterprise teams to maintain innovation and vitality at all times. As mentioned earlier, outstanding companies like Tencent benefit from competition, but behind this success lies their own hard work. 

Tencent adheres to a horse racing mechanism at the product level, encouraging teams to continuously produce high-quality products, maintain competitiveness, and constantly understand user needs to win over users with better products. WeChat, which is used daily by millions, is a product of this horse racing mechanism. At the time, Tencent had three teams simultaneously developing WeChat. Although all three were named WeChat, they operated independently and competed with each other. Eventually, the team led by Zhang Xiaolong from the QQ Mail team in Guangzhou defeated Mobile QQ and another team, winning the victory. Under the pressure of intense competition, the originally lengthy development period was compressed to just one month.

The "horse racing mechanism" exists in many companies and is one of the important ways to generate excellent products. The benefits are obvious: it can cultivate products like WeChat and "Honor of Kings," which are phenomenal.

In an interview, Mr. Pony Ma described the "horse racing mechanism" as follows: "Within the company, there often needs to be some redundancy, tolerance for failure, allowance for moderate waste, encouragement of internal competition, and trial and error." For large enterprises, moderate waste and trial and error, while maintaining stability in the overall strategic situation, are necessary. The "horse racing mechanism" often also serves as a filtering mechanism, by tilting all resources toward good horses, helping companies shuffle their products and businesses. Good horses are likely to further grow into "phenomenal" horses, while poor ones gradually fade from view. WeChat and "Honor of Kings" are examples of successful good horses.

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3. In the realm of venture capital, direct competition among firms is not as common, as there are often situations where large corporations face challenges from startups with differentiated offerings. Not to mention, mature and popular market segments are already crowded with competition, and the technological and resource advantages accumulated by large corporations over the years are unmatched by startups. Therefore, startups often need to avoid popular trends, learn to compete in niche markets, and explore areas that may seem invisible or even disregarded in order to have the opportunity to stand out and rapidly develop their own ecosystem in the business world.

The ideas or technologies of entrepreneurs are often difficult to be defined by one or a few market segments, industries, or concepts, let alone facing evenly matched opponents. Walking on a path without opponents, startups need to learn from mature companies, drive themselves, find the right direction, and then continuously move forward.

In a sense, venture capital itself encourages differentiated competition by supporting the growth of startups, thereby driving companies and even entire industries forward.

As a venture capitalist, this is one of the important criteria for my decision-making: facing a dazzling array of projects and various outstanding talents, we seek entrepreneurs who not only have imaginative ideas and perseverance but also have the courage and determination to surpass the sky. We hope to see brave founders embrace competition with fearlessness and lead their teams to refine themselves and achieve breakthroughs under pressure. 

Reflecting on past investment experiences, a new technology is often obscure in the market during its early development stage, with high production costs and inefficient processes. When established companies persist in doing what they believe is right and mainstream, the role of investors lies in understanding and evaluating the industry and technology, predicting and seizing future trends, making decisive moves, and investing. This pushes innovators and value creators toward maturity, from the periphery to the mainstream, creating new market segments and industries, and collectively establishing lasting value.