Create, Not Compete
Build differentiated strategies before scaling them into the mainstream
- Difficulty
- Advanced
- Time to result
- ~months to results
- Steps
- 6
- Confidence
- 94%
The method replaces head-on competition with deliberate market differentiation. A firm begins by locating an underserved strategy, structural void, or supply-demand imbalance where its existing expertise can create a credible offering. It then gives customers a specific reason to choose the new entrant, deploys the strategy on a focused basis, and builds evidence through performance and a visible track record. As competitors arrive and the niche becomes mainstream, the early entrant uses its established reputation and adjacent capabilities to scale. Competition is not treated as failure; it validates the opportunity while strengthening the value of being early, differentiated, and already proven.
Origin
Extracted from Masters in Business, where Mathieu Chabran described TKO Capital's use of private credit, secondary private credit, and infrastructure strategies to establish differentiated positions before those markets became mainstream.
Core principles
- 01Enter underserved spaces instead of copying established competitors
- 02Give customers a clear reason to choose a smaller entrant
- 03Establish a track record before the opportunity becomes mainstream
- 04Use adjacent capabilities to scale a proven innovation
- 05Welcome later competition as validation of the market
How to run it
- 1
Find the structural opening
Look for an underserved customer need, market void, or supply-demand imbalance that established competitors are not addressing well.
Pro tip Favor opportunities supported by durable structural change rather than temporary fashion.
Watch out Being different without solving a real problem is novelty, not strategy.
- 2
Connect the opening to your expertise
Select an opportunity where your existing knowledge, relationships, or operating capabilities provide a credible right to win.
Pro tip Start with capabilities already demonstrated in an adjacent market.
Watch out Do not enter a niche solely because it appears uncontested.
- 3
Form a distinct proposal
Explain precisely why customers or investors should choose your offering instead of a larger incumbent's conventional product.
Pro tip Make the differentiation concrete enough to affect an allocation or purchasing decision.
Watch out A different story without different economics or execution will not endure.
- 4
Launch narrowly
Deploy the strategy at a manageable scale and test whether the opportunity works in practice.
Pro tip Use an initial niche where feedback and results can be measured quickly.
Watch out Scaling before validating the mechanism can magnify avoidable losses.
- 5
Prove the strategy
Build a track record that demonstrates the proposal's merits and gives future customers evidence beyond the original narrative.
Pro tip Document both financial outcomes and the mechanism producing them.
Watch out Do not mistake early interest for repeatable performance.
- 6
Scale through adjacencies
Extend the proven capability into related markets, geographies, or products as the strategy becomes mainstream.
Pro tip Preserve the original advantage while adding distribution and complementary expertise.
Watch out Expansion into unrelated areas can dilute the differentiation that created the opportunity.
In the wild
TKO entered secondary private credit when private debt was already established but its secondary market was less mainstream. After several years, the firm could present both the strategy's merits and its track record while larger institutions began discussing similar offerings.
→ The early move established a differentiated reputation before broader competition validated the strategy.
The firm expanded into US mid-market infrastructure before infrastructure became a central political priority. The strategy gave it a different story for both overseas and US limited partners rather than duplicating its European product set.
→ An adjacent but differentiated strategy created another path for US growth.
Common mistakes
Following the herd
Copying an established strategy leaves a smaller entrant without a compelling reason for customers to allocate capital to it.
Scaling before proving
A differentiated idea needs a demonstrable track record before broad expansion can turn it into a durable franchise.
Treating competition as defeat
Later competition can validate the market; the early entrant should capitalize on its record rather than abandon the strategy.
Is it for you?
Best for
It is best for entrepreneurial firms with specialist expertise that can enter an overlooked but structurally attractive niche.
Not ideal for
It is not ideal for firms lacking the patience, expertise, or capital needed to validate an unfamiliar strategy.
From the transcript
“create not compete”
“coming with something that is different so that you can slay.”
“at least you've established, you know, a name for yourself and obviously got the track record and you can, you know, you can showcase that.”
From the episode
Mathieu Chabran on Using Creativity to Compete
Mathieu Chabran