I’ve been doing a lot of investor pitch preparation with clients recently and one area where companies are consistently weak is the “competition slide“.
Looking for some inspiration on improving these I came across a great analysis from Jason Cohen of Capital Factory in Austin. He identified two classes of competitive positioning flaws that showed up frequently in 150 pitches he reviewed:
I’d add a third:
Misunderstanding what a sustainable competitive advantage is.
Let’s look at each of these in turn.
“We have no (real) competitors”
95 times out of 100 this translates to, “we haven’t explored our market space thoroughly and/or we don’t know the industry in which we’ve chosen to compete.” Four times out of 100 it maps to, “our solution is truly novel but we haven’t considered substitutes, the status-quo, homegrown solutions and the like as competitors for the customers time and money.” One time in 100 (at most) it’s true; which sounds like a great thing but is often a curse given the high cost and extreme difficulty of creating a new market or the possibility that no competition means that there isn’t a market at all. All three are red flags for investors looking at your pitch. In the first two cases, do your homework. In the last, think long and hard about whether this is the right go-to-market approach.
“We are just like competitors X and Y but cheaper” or “We combine all the best features of competitors X, Y and Z”.
“Cheaper” is always interesting but often doesn’t pass scrutiny in one of two ways:
If your strategy is to combine the “best” features of your competitors, which customers are you “best” for and why?
“We are {smarter, faster, nimbler, more dedicated and passionate} than our competitors and we have (secret, patented) feature X.”
Smarter, faster, nimbler, dedicated and passionate are traits that every start-up team touts and often it’s true (at least compared with some competitors) but it’s unprovable and claiming it shows both hubris and naivete. If your competitive advantage is just a particular feature, protected or otherwise, what do you plan to do when big company A or better funded start-up B inevitably copies it?
So what should you do?
A weak competition slide is what investors typically see. Making yours credible, complete and insightful will help your start-up stand out.