The Three Advantages: Informational, Analytical, Behavioral
- Difficulty
- Moderate
- Time to result
- ~months to results
- Steps
- 6
- Confidence
- —
Daniel Ek's model for how a small challenger beats an incumbent. Any durable edge falls into one of three buckets: informational (you see data others don't), analytical (you can interpret it better than anyone), or behavioral (you can act in ways others can't or won't). Big companies usually own the first two — Spotify's 550 million users give it consumption data no new entrant has. Startups almost never win there. What a small team does own is behavior: speed, small size, tolerance for the grey zone where the rules aren't yet written. So instead of asking 'can we build a better product', you ask 'where does it pay off to be fast, small and willing?' — then compound that with thousands of hours of unique thinking on one problem.
Origin
Extracted from Deep Dive with Ali Abdaal
How to run it
- 1
Name the incumbent and what it actually owns
Before choosing an angle, write down the dominant player in the space and list what its scale genuinely buys it: user data, distribution, relationships, expertise. Ek's point is that a challenger must be honest about the asymmetry rather than assume a better idea closes it.
Pro tip Write the incumbent's advantage list as if you were pitching for them, not against them.
- 2
Test for an informational advantage
Ask whether you can see something about behaviour or demand that others cannot. Spotify's version: using music-taste data as a possible indicator of what books a listener may want. If you don't have proprietary observation, mark this bucket as lost and move on.
Watch out Public data everyone can buy is not an informational advantage.
- 3
Test for an analytical advantage
Ask whether you can interpret the same information better than everyone else — Ek's illustration is sitting on the fifty world experts in a niche. He notes this is the hardest of the three to establish and the one investors most often claim.
Watch out Ek calls this 'much harder to kind of understand' — do not assume you have it because you are smart.
- 4
Hunt for the behavioral advantage instead
This is the bucket Ek calls the most underutilised and underappreciated: you can behave in ways other people can't or don't want to. A large company can't take the same regulatory or legal risk, can't move as fast, can't stake its reputation on an unproven category.
Pro tip List things a listed company's legal team would veto but a five-person team could try.
- 5
Choose a problem where speed and smallness pay off
Filter opportunities by whether the behavioral edge actually converts into value. Ek's rule: go for things 'where it pays off to be faster, where it pays off to be a smaller team'. If speed and size don't change the outcome, the incumbent's advantages decide the game.
Watch out Grey zone means unclear regulation, not illegality — Ek is explicit he isn't advocating breaking the law.
- 6
Compound it with thousands of hours of thinking
Ek's final layer for the solo operator with a day job: very few high-quality people spend thousands of hours thinking about one specific problem. Sustained thinking on a narrow problem manufactures an informational and analytical edge that scale alone can't buy.
Pro tip Protect the thinking hours before you protect the building hours — thinking, as Ek puts it, is cheap.
In the wild
Launching audiobooks into a market dominated by an entrenched incumbent, Spotify didn't try to out-catalogue it. Ek described looking at whether a user's music taste is a possible indicator of the kind of books they might like — a question only a company sitting on 550 million users' listening behaviour can even ask. A fresh entrant to audiobooks has no such signal. Paired with bundling audiobooks into existing Premium subscriptions in the UK and Australia, the informational edge is what makes the entry defensible rather than merely competitive.
→ Audiobooks launched inside Premium with 15 hours of listening and 150,000+ titles, using consumption data no new entrant could replicate.
An operator with a full-time job wants to build a tool for a niche the market leader also serves. She has no data edge and no expert bench, so she scores herself on behaviour instead: she can ship a change the same afternoon a customer complains, she can serve 200 customers the leader considers too small to staff, and she can publish opinionated content the leader's legal team would never approve. She chooses the segment where response time is the buying criterion, and spends her commute hours thinking about that one workflow rather than building features.
→ Wins the segment on responsiveness rather than feature parity, in an area the incumbent structurally cannot match.
Common mistakes
Assuming a better product is an advantage
Product quality isn't one of the three buckets. Incumbents can copy features; they cannot copy the fact that you're small, fast, and able to accept risk they can't. If your entire plan is 'ours is nicer', you have no advantage in Ek's sense.
Claiming an analytical edge you don't have
Ek notes investors routinely talk about informational and analytical advantages. Believing you simply think better than the market is the easiest of the three to fake and the hardest to verify — treat it as unproven unless you can name the specific experts or models you own.
Reading 'grey zone' as permission
Ek is careful: highly disruptive things sit where it's unclear whether something is fully legal, which is not the same as illegal. Treating the behavioral advantage as licence to break rules converts a startup edge into an existential risk.
From the transcript
“there is informational advantages you can have right there's analytical advantages you can have and then there behavioral advantages you can have”
“so I would just go for things where you can have some sort of Behavioral Advantage where it pays off to be faster where it…”
“investors typically talk about having sort of an informational advantage or an analytical Advantage”
From the episode
Spotify Founder: “Your Music Taste Could Signal The Books You NEED to Read” - Daniel Ek
Daniel Ek