I've had quite a few Clarity calls this past week with entrepreneurs asking for advice on how they should go about building & branding their new startup.

My best advice at the moment: Don't try compete on features.

Most markets that you can enter right now, are already quite saturated and you're likely to face existing competition. Due to the very low barrier to entry to build a new SaaS / web / mobile app, you'll also find that the competition's offering is mostly the same as your solution.

This means that there's simply no competitive advantage in trying to out-feature your competitors and such a strategy is very unlikely to get you the traction you need to build a sustainable business.

Instead here's two alternatives to build a competitive advantage for your startup:

1. Branding. Tom Tunguz rightly says that branding is the next essential startup competency. In a crowded space, it's important to stand out and doing so why your branding is the lowest hanging fruit.

2. Customer Service / Experience. Delivering the most awesome experience imaginable to your customers will a) make them loyal to you; and b) make them tell their friends. This is a competitive advantage that you can leverage to grab market share away from your competitors.

We've applied both of these strategies at WooThemes to great success; especially considering that all of our code is open source and freely available elsewhere. Our 400 000+ customers however keeps coming back to us, because they know (due to our branding / reputation) that we're awesome at supporting our products (delivering an awesome experience).