Who do we compete against, what are the alternative solutions, and why should we be winning?
If we go back to your “Problem” slide, you hopefully define at least one big problem that you solve (on your “Solution” slide).
Someone else is likely claiming to solve this problem, too, but in a different way, at a different cost, or in a different part of the world for a different audience.
On this Competition slide, you should list companies that claim to have a solution that could be an alternative to yours in the geographical or vertical markets where you plan to sell your wares.
The competition slide has a few key objectives that must come across to investors:-
- The existence of competitor solutions validates a problem and an addressable market.
- Your potential customers are looking for suppliers or vendors to fulfill their needs but not at your level.
- There is a market gap that your differentiated solution can seize
- We uniquely position ourselves in the market compared to competitors (e.g., by being better/faster/cheaper/simpler/available, etc.)
What if you're creating a new market? Explain “what job your product/service accomplishes” and the existing, less efficacious methods in such cases. For instance, early PC spreadsheet and laptop companies had to depict competition against pen and paper or bulky, non-portable PCs.
In most cases, it was through explaining “what job was being done” with their solution and how it was done before. In the case of VisiCalc (the world's first PC spreadsheet), it was pen and paper or having a mainframe computer with costly applications. With the Osborne (the world's first portable PC), it was with clunky PCs that you could not bring with you on trains and flights.
Also, consider that many SaaS companies and apps have emerged by replacing complex Excel sheets with streamlined, user-friendly applications serving specific industries (e.g., accounting, financial planning, HR, payroll).
How do you create an easily understood competition slide?
- Include only significant market players that potential customers usually consider.
- Exclude competitors not active in your geographical market, yet cite them as evidence of demand elsewhere and a market gap in your area.
Case in point: Many European startups have copied US successes and executed fast to build local market leadership. Rocket Internet in Berlin is famous for this startup studio business model.
Your slide should then describe your competitors’ good and bad functions, focusing on why you differ in areas that matter to the customer. It’s also helpful to explain how the market perceives them, maybe as incumbents “sleeping at the wheel” or as other industry challengers or disruptors.
Be careful to avoid bad-mouth competitors, as no one is impressed.
Communicating your startup's position in relation to alternative solutions is crucial. Ideally, emphasize a single, compelling differentiation rather than juggling multiple points. Help your audience remember one unique aspect you do better, making all the difference!
In our therapy health app example, the competition slide would feature current physical therapy services—both private and state-provided. The unique selling point would be swift and accessible therapy for digital-savvy GenZ who may prefer to seek help privately. Once the app gains traction, data illustrating the increase in therapy sessions will further validate its effectiveness. Contrast this with the existing, cumbersome process: confirming insurance coverage, finding a clinic, booking and waiting for appointments, causing youngsters potentially to endure quietly due to the complicated process.
Numerous techniques exist to articulate your competitive edge effectively. One of the most effective methods is through competitive mapping.
The X/Y Axis or Quadrant Mapping
This competitive analysis map uses two main dimensions or differentiation factors. It divides the market into four segments and populates each segment with competitive companies, indicating their market position.
Consider these two factors crucial when a customer is looking for a solution. Ideally, you want to be placed in the top right corner!
So, how do you pick the dimensions?
It could be the depth or breadth of your offering. It could also be a measurable level of speed, simplicity, speed, or value for money, which we gave as an example in our therapy health app. Whatever you choose, make sure you can measure these factors. Avoid phrases that speak to emotion or general qualities, like “likable” or “complete."
As shown below, Airbnb used market mapping with "cost" and "online vs offline" as key factors. To convince investors, they added six more advantages. They could have used two of these to refine their map.
Petal Diagram
Steve Blank, a startup guru, designed the Petal Diagram. This places your company at the heart of the business landscape, especially useful for startups with new or blended products and few direct competition.
The diagram is divided into segments aligning with your startup's focus, filled with known companies that partake in your solution. Adding each competitor's funds or market value can help predict the potential market size.
For instance, Slack's Petal Diagram shows various companies they considered replacing or complementing. As their market grew and competitors appeared, Slack could eventually create Quadrant Mapping.
Source: Steve Blank
The purpose of these mapping techniques is to deliver a single-slide overview of your competitors. But in many cases, you must provide supportive slides to drill deeper into the product and its “underlying magic. “
The Competitive Analysis Table
This table highlights the features and functions of your solution, including customer support services, if applicable.
The competitive analysis table usually needs to be lighter to include as a first slide, but preparing a detailed competitive analysis demonstrates that you have done your homework. Tracking competitors takes time, but being informed and learning from them is essential.
Lastly, on the competitive slide, if you can provide evidence of customers switching from one or more of your competitors to your solution in the last quarter, you have solid credibility to back up your beautiful diagrams!
Questions the competition slide should address:
- Who are your main competitors, and what is their market share?
- Who competes for your customers, and how do they go about it?
- How does your product/service differ from those offered by your competitors? What differentiates you -- what is your unique value proposition?
- What are the strengths and weaknesses of your competitors, and how does this compare to your company's strengths and weaknesses?
- What opportunities (or gaps) in the market are currently unmet, and how does your company plan to capitalize on these opportunities?
- How is your company positioned against competitors? This can typically be illustrated with one of the positioning maps above.
