Every VC wants to discuss who your competitors are and how you are positioned relative to them. If you say you are as good as your competitors at this moment, you have lost. You must explain your jujitsu at this moment.
I see a fair amount of business plans and most of them have a slide about the competitors. If your presentation doesn’t, then you probably should add one. But most people don’t do a great job on this slide even though it is super important. It is a slide that crystalizes your differentiation and strategy to the VC, so don’t screw it up.
And by “don’t screw it up”, I mean make a slide that doesn’t crystalize your differentiation and strategy to the VC.
One way to make a pretty slide that addresses competitive positioning is to make a 2×2 matrix graph. I think everyone wants to do this, but it is usually very difficult.
In a matrix like this, it is all about “upper right-hand corner”, but markets are usually not so simply that they can be described in two dimensions. Usually there are companies that float around in the middle of matrices like this and it isn’t obvious what they are doing because they segment the market differently. Then you spend a bunch of time talking about that and it is OK, but not necessarily great. It can be great: If they are segmenting the market wrong and you are the first person in the world to realize that these two dimensions are the ones to optimize on, then great. Go to town. But it doesn’t happen a lot.
Usually markets are more crowded and nuanced and people use a table to describe their competitors. This is fine, but do it right.
There are a couple of columns you can always put on that are fine or not fine, I lack strong feelings: Price, number of customers, amount of money raised. These things are things that investors will want to know about. It might be nice to skip to the end and just tell them.
So you have a table. You are the first column in that table. You are comparing yourself to competitors. Put yourself in. Then put your competitors. If there are some broad categories, you can pile them in or you can break them out and group them. Doesn’t matter that much.
Now here is the key: Don’t make this a feature list competition. If the way you plan to win is for your tiny start-up to have a longer feature list than your pre-existing competitors, you fail. It is not possible for you to build everything they built, then other stuff also.
You need two kinds of features on this chart:
- Features that your competitors have built that lock them into their paradigm and keep them from doing what you plan to do.
- Features that you are doing that they do not do, that they cannot simply duplicate, and will allow you to succeed where they have failed.
If this slide does not, at this point, clearly artculate why customers prefer your product to competitors, then it may be time to pivot.
If this feature plan does not reflect your engineering roadmap, then you should revise. This is the MVP. This is the differentiation. This is the customer development that you want to test in the market.
Your competitor slide has to demonstrate how you zig where they zag, why they did not zig, and why they can never zig. If your plan is to follow in their footsteps, you have a bad plan. You need to have a plan to do something differently that will allow you to defeat them.