Dear SaaStr: As a Startup, What Are Some Effective Ways For an Underdog to Take Down Their Competition?
It depends on the gap. In B2B historically, I’d argue if your competitor is larger than you, at $8M-$10M+ in ARR and growing quickly, with even reasonably happy customers, then it’s too late. Too late to “take them down.”
That used to take decades, at least. So maybe don’t make that the primary goal.
But 2026 has changed this calculus pretty dramatically. AI-native companies are crossing $100M ARR in under 18 months. Cursor, Lovable, Replit, Harvey, Sierra, Glean, Clay — all hit milestones that used to take 5-7 years in 18 months or less. They’re not just denting incumbents. They’re displacing them. The 400+ B2B unicorns from the 2021 vintage that haven’t found exits? Many of them are vulnerable to exactly this kind of attack right now.
So the underdog playbook now in the Age of AI is more aggressive than it used to be. You can take real share. Sometimes you can take down a category leader, especially if they’re built on pre-AI architecture.
How to win as an underdog when your competitor is bigger than you and growing just as fast, or faster:
- Be Truly 10x Better At Just One Important Thing. Just understand this differentiation lasts for far less time than it used to. Do you have a key Salesforce or Slack integration they don’t? Are you localized and they aren’t? Are you 100x faster to deploy? Pick one important thing that customers buy because of and be 10x better at that. Because you won’t be better at everything. In 2026, this is even more critical because AI lets you ship the 10x feature in weeks instead of quarters. Vibe coding has compressed the time from idea to production-ready by 5-10x. If you can identify the one thing customers really care about and ship it before the BigCo can, you have a real opening. Cursor did this with code completion. Lovable did this with vibe coding for non-developers. Both took share fast.
- Be Genuinely AI-Native When They Aren’t. This is the new strategy for 2026, and it’s the most powerful one in many categories. Most B2B incumbents from 2018-2022 are now bolting AI features onto products designed for human-in-the-loop workflows. They can’t fundamentally redesign without breaking the existing customer base. You can. Build the product around AI agents from day one. Outcome-based pricing instead of seats. Workflows that assume an agent does most of the work. PagerDuty got displaced this way. Mixmax is getting displaced this way. A lot of “AI features added” products will get displaced this way over the next 24 months. Don’t try to add AI to a B2B playbook. Build AI and add B2B economics.
- Go More Enterprise. Be more secure. More trusted. Safer. More reliable. If your competitor is very SMB focused, there is always room at the high end. And you can charge more for this. The 2026 wrinkle: enterprise buyers in AI-adjacent categories want vendor stability, security certifications, deployment partners, and FDE-style implementation support. If you can deliver enterprise-grade ops on top of an AI-native product, you’re in a category of one in many spaces.
- Room at the Bottom. Most B2B companies begin to de-prioritize the bottom of the market. SMBs can get you to $10M ARR, but it’s much harder for most B2B companies to go from $10M to $100M on just $10/month deals. You naturally focus on bigger customers and getting them to pay more. And this leaves room at the bottom. AI has made this strategy even more powerful. AI-native tools can serve SMBs profitably at price points that were unviable in the pre-AI era. The cost-to-serve has collapsed. Companies like Replit are building serious businesses on freemium plus low-end pricing that legacy B2B can’t match.
- Be Much Cheaper. My least favorite strategy, but it works. At least, it’s a good strategy to be #3 in the market. Oligopolistic B2B markets often end up with a #1 Leader (60-80% market share), a #2 More Innovative player (20-30% market share), and a #3 Dirt Cheap player. The problem is this segment is high churn, low loyalty, and super price sensitive. It may end up being the most competitive segment of the market. But there is usually room for a Dirt Cheap #3 in most $100M+ market segments. In 2026, the new version of “much cheaper” is often “outcome-based vs seat-based.” If the incumbent charges $50/seat/month and you charge per resolved ticket or per closed deal, you’ve made the price comparison apples to oranges, and customers love that. It’s not really cheaper. It’s just aligned with their outcomes.
- Out-Ship Them. This wasn’t really a strategy in the original list because it didn’t matter much. Products were stable. Now it matters a lot. If your competitor is on a 12-month release cycle and you’re shipping weekly, you’ll out-iterate them on every customer-requested feature. The accumulated product gap after 18 months is enormous. Public B2B incumbents are particularly vulnerable here because their release cycles are gated by enterprise QA, customer comms, partner ecosystems, and regulatory review. They can’t ship weekly. You can. Use it.
Some ideas.
The 2026 reality is that most “take them down” outcomes still take years, not months. But years, not decades. The asymmetry between AI-native challengers and pre-AI incumbents is the biggest competitive opening B2B has seen in 15 years.
