Get Your “Competition” Slide Right
As an investor, one of the slides I most look forward to in a pitch deck is the “competition” slide. This is the slide that outlines your company’s competitors, your positioning in the market, and how you are planning to rise to the top. Though arguably one of the most important slides in your deck, in my experience founders fail to spend enough time thinking about this slide. As a result, they almost always get it wrong.
Common mistakes include underestimating and misrepresenting the competition, failing to account for the customer’s perspective, and drilling down on specific product features rather than taking a holistic, solution-oriented approach. Guess what? Investors see right through that, and messing up here can be fatal for your pitch deck. And what’s worse, if you don’t read the market map right, your business itself will suffer.
In this article, I will talk about the biggest “competition” slide mistakes I’ve seen (and have made myself), and how to avoid them. Then I’ll take you through the basics of holding a competitive analysis for your business — and talk about why it’s important to conduct this kind of analysis early on in the life of the company (hint: a good analysis serves as the basis for your product and market strategy, and just happens to be the main input source for creating a “competition” pitch deck slide).
Common mistakes
In 99% of the decks I see, founders use either a two axis chart (inspired by Gartner’s Magic Quadrant) or a power grid table to highlight the superiority of their product (petal diagrams or spider charts are not as popular in Europe as they are in the US).
If the company takes the Gartner approach, its product inevitably lands in the “optimal” upper right-hand corner (surprise surprise…). If they use the table comparison, their product is the only one that receives all the V signs or full circles. So: Their product is the best, life is good, let’s move on, right? No!
There are a few reasons these approaches don’t work.
Picking and choosing
The biggest mistake founders make is to present a competitor analysis based solely on product features. In this case, founders select a biased feature list so that their product looks like it’s clearly the best in the market. This approach is understandable — after all, you want to show your product “winning.” But everyone in the room (founder included!) knows that’s not really the way the world works. Rest assured that your competitor will select a different set of features that will make them shine brighter than you. Or they might even choose the same list but rank you lower. Trust me when I tell you that this type of slide won’t convince VCs — and it won’t leave them with a very good impression of your integrity or judgement.
Missing the customer’s perspective
Furthermore, when your customers look at the product you and your competitors are putting out there, they may very well focus on a completely different set of features than you do. Where you see awesome, cutting-edge tech, they might wonder, ‘where’s the ‘on’ button?’. In fact, generally speaking, customers will not focus only on product features. Having participated in many sales calls of software companies, I can tell you that services — integration with IT, users’ onboarding process and customer support — are more than half the battle, when it comes to convincing customers to give your product a try.
Customers buy solutions, not features. They don’t care about fancy bells and whistles nearly as much as they care about the product solving a real problem for them.
Finally, even if we engineers want to believe that the customer’s decisions are based on rational calculations alone, that’s simply not the case. In every transaction (even B2B), decision-making comes down to people — and people tend to follow their feelings. Therefore, focusing on features may help you position your logo in the upper right corner. But if you fail to understand your customer, this “ranking” is meaningless. Investors will notice that your analysis is superficial and you will lose credibility, to boot.
Ignoring indirect competition
Another common mistake I see are “competition” slides that only take into account the direct competition. That is, other players (startups or incumbents) who offer similar products and services targeting the same market and customer base as you do. While it is human nature to focus on the immediate danger from our direct competitors, in most cases it is the indirect competition that will eventually run you out of business.
I have seen this happen over and over again. A recent prominent example is the case of DefinedCrowd, a Seattle-based startup that counted Amazon among its investors. At the time of the investment, Amazon did not have any products like the one DefinedCrowd offered, so I guess “Amazon” wasn’t on DefinedCrowd’s “competition” slide. But four years later, Amazon launched an almost identical product, undercutting its own portfolio company.
Indirect competitors come in many different shapes and forms. One major overlooked threat is players who offer different products than you do but are servicing the same customer. In that case, these indirect competitors might one day build a similar product to yours, and take away your market share (see the Amazon/DefinedCrowd case).
Another oft-ignored threat comes from players whose product is similar to yours, even though they do not service the same geographic market or even the same market segment. These indirect competitors could expand into your geographic market — especially as geography is a low hurdle to overcome. Or they might decide to target a new customer base (like a new vertical or business size) — something that is harder to accomplish, but not impossible. For example, if you are a startup developing an HR management system for SMBs, you should not ignore SAP SuccessFactors just because it is focusing on the enterprise market today. With the budget and manpower SAP has, at any point it could decide to target smaller businesses — and eat your lunch.
Neglecting “next-best” solutions
The third competition factor founders tend to ignore is the role alternative (or “next-best”) solutions play. These are the systems that are usually already in place — they might not be the very best, but they work well enough, and getting customers to abandon them for your superior product is a major hurdle.
“Next-best” solutions include anything that does not involve the customer having to buy a product from a vendor. These range from manual solutions (spreadsheets, checklists, pen and paper solutions etc.) to homegrown software applications, either done internally (e.g. by the IT department) or outsourced to consultants (e.g Accenture).
Usually, when talking to customers, you find that “next-best” solutions are entrenched, and thus very hard to let go of. Convincing customers to change the status quo requires more than just a set of appealing features. You need to have a deep understanding of the customer’s pain points, the costs and headaches involved in making a switch and know whether or not the issue is urgent enough for the customer to budget time and money for a changeover to your product.
Never underestimate the pull of alternative solutions. They are deeply embedded in the processes of the customer’s organization and in people’s behaviour. Just think of how many startups have tried and failed to replace excel!
Missing major industry shifts
Finally, hard-to-predict changes can transform the landscape overnight, giving your competitors a major advantage. One example is a major technology shift — as I learned from my own personal experience.
Back in 2016, I invested in intermix.io, a San Francisco-based startup that developed a performance management tool for cloud-based data warehouses. At the time, the clear market leader was Amazon’s Redshift. It was everywhere, everybody used it and it was AWS’s fastest-growing service. Working with its limited budget, intermix decided to support Redshift initially, and sales were growing nicely. Yet, in late 2018 customer numbers flattened and it took us two (expensive) quarters to understand why.
Our market was imploding. There was a paradigm shift in technology — from “server-based” (Redshift) to “serverless” computing (led by Snowflake). The change eliminated the need for intermix’s performance tool. The company reacted, rebuilding the product from the ground up. But then, they had to prove out their market all over again — just when the COVID-19 pandemic froze the venture market. As a result, the decision was made to sell the company.
While working on this article, I went back to the seed deck of intermix to check the “competition” slide. There wasn’t one! I asked Lars Kamp, intermix Co-founder, why they didn’t prepare the slide back then. His reply was, “because we struggled with that slide.” He went on to explain that the reason for that was that there weren’t any visible competitors at the time. Investors were worried that database vendors would build intermix’s product functionality into their databases, but Lars knew that wasn’t a problem: “There were specific reasons why we knew the vendors couldn’t do that, and sure enough it never happened,” he said. “The competition turned out to be a paradigm shift in technology.”
Lars wrote a detailed lessons-learned post on the history of intermix. I can highly recommend it, particularly as it emphasizes many of the points above. Namely: product features are not everything customers look for, and competition comes from many sources, not all of which are direct.
Naturally, you can’t list possible massive landscape shifts on a “competition” slide. But they are something you and your investors should be aware of and keep at the back of your minds. That way, if a big shift happens, you have a better chance of recognizing it in real-time and reacting.
Now: Get it right
So, we’ve established that it is very hard to identify all of your competition, and even more difficult to predict how the market will evolve. The good news is that the goal of the “competition” slide is not to serve as a crystal ball, but rather to show VCs just how well you know your industry. For investors, it’s a very good sign when a founder presents a realistic picture of the competition landscape — one based on profound research work, including many conversations with customers and other market players.
The “Competitor Analysis”
Because it is such a foundational piece of your company’s pitch deck, the competition slide should never be an afterthought. In fact, your competition slide should be drawn from an in-depth evaluation of your competitors’ companies, products, and marketing strategies — a process known as a “competitor analysis.”
A “competitor analysis” is something you should devote time and energy to early in the life of your company. Not only will a good competitor analysis serve as the basis for understanding your company’s competitive environment, but it will also help you position your product and company, refine your business model, and, last but not least, serve as the main input source for creating a “competition” pitch deck slide.
Be aware that conducting a good analysis requires significant time — at least a few days. And it is not a one-off activity. You should continuously track and reiterate the process as the company grows.
Holding a Competitor Analysis
There are many ways to hold a competitor analysis. All of them require intensive discussions with customers, and, ideally, also with your potential competitors. The end goal is to map the market.
You can find one framework for getting started here, or use the process developed by my former colleague, Nadja Hatzijordanou. Nadja’s approach (which is based on her PhD work) includes six steps to help you structure the process. First, you build the foundation for the analysis by clearly identifying your own product and business. Then, you specify the scope of the analysis: how much time and money do you want to invest? How will you compile the information you gather? In the third and fourth steps, you identify the companies you consider competitors, and then collect information about them. Next, you represent the collected information on a map (we will talk about that part later). Finally, you discuss the results within your company.
No matter which framework you follow, by the end of the analysis, you should know the following things about each of the players:
- Capabilities — the product features
- Advantages / good practices / USP — anything beyond the product, like great customer support, pricing etc.
- Target markets — which industries, geographies, or types of businesses are serviced
- Sales/distribution model — what is the go-to-market approach
- Valuable partnerships — do they have strong go-to-market partners? To quote Lars again:
“Distribution beats product! First time founders worry about product, second time founders worry about distribution”
- Possible extensions — what else can they come up with (e.g new products or verticals)
- Funding / Team size — what kind of budget and resources do they have
Plot your competitors on a map
Once you’re done with the competitor analysis, you should have a clear understanding of the market and a better idea of how to position your product for success. The next step is to plot your competitors on a map (if you haven’t done this already, as part of the analysis). The competitors’ map is a graphic representation of your competitive analysis and it will also serve as your “competition” slide.
One way to map the competition is to use a Strategy Canvas, suggested by the authors of the Blue Ocean Strategy book. The Strategy Canvas is a chart that breaks down your competitors by various aspects of their businesses and products. It graphically captures the strengths and weaknesses of the different players.
I would like to suggest another way to map the competition, as well. This one focuses on figuring out if the other player is a real competitor today, a possible one tomorrow, or actually a potential partner. Furthermore, this map helps you understand what kind of strategy and actions you should take vis-à-vis each of the players.
Introducing the “friend or foe” map
My method uses two variables to determine if a company is a friend or foe. The variables are the level of overlap in served markets (this could be geography, industry vertical or size of the target customer) and the level of overlap in solution (i.e. to what extent the competitors’ products and services are similar to yours).
Plotting the variables on two axes gives us four quadrants, each describing a type of player.
Let’s look at the four quadrants and the approach you should take vis-à-vis players in each of them:.
Quadrant 1, Low Solution overlap, Low Markets overlap
Companies in this quadrant develop technologies somewhat similar or relevant to what you work on. They do not pose an immediate threat to you.
Strategy — Observe / Engage: you should observe these companies and try to predict their next moves. These companies could also be possible acquisition targets, should you want to expand into new markets/functions. Or the other way round, these could be your potential M&A buyers. If the companies are big (e.g. corporates or mature startups), you can explore the possibilities for partnerships. But remember, big companies could easily turn into a threat due to the fact that they have the financial resources to build teams and fund new products. So, actively look for any market communication indicating such interest.
Quadrant 2, Low Solution overlap, High Markets overlap
Strategy — Partner: This could be a good opportunity for a partnership, since you and the competitor address similar markets, but have complementary solutions. The risk, of course, is that a player decides to expand their product/functionality range, thus posing a direct threat to your business. The action to mitigate this risk is to partner with those players and to build strong relationships with your customers so switching will not be quickly done.
Players in this quadrant are also natural acquisition targets.
Quadrant 3, High Solution overlap, Low Markets overlap
These companies offer similar (if not the same) products offered by you but they target different markets. A good example is startups comparable to yours, but outside of your geographic target market (e.g. you target Europe and the others are in the US).
Suggested strategy — Keep track / build high barriers to entry: These companies are indirect competitors and you should consider them a risk. They have the technical capability and financial resources to try to enter new markets. Of course, targeting new markets such as new verticals would require a lot of effort, but some of the players are well-funded and have the time to make the change. You should keep track of their actions and build high barriers for them to enter your market (e.g. by filing patents, lobbying for regulation, securing exclusive rights etc.).
Quadrant 4, High Solution overlap, High Markets overlap
These companies pose a threat to your business today. They provide products with very similar functionality to you and target the same customers. These are the direct competitors.
Strategy — build a USP: Perform active due diligence and identify strong and weak points of your and competitor’s offering. Craft a compelling story that differentiates you from the rest of the pack and emphasizes your value proposition and brand (i.e. you need to speak both to the rational and the emotional brain of your customer). If you have conducted the market/competitor analysis early on, then you actually should have all the strategy you need.
Friend or Foe Map: A Case Study
I recently completed a competitive analysis with the Swiss startup Daedalean AG as part of the preparation of their new pitch deck. (For the sake of simplicity and confidentiality I’ll share an edited version of the full analysis here).
Based in Zurich, Daedalean is developing autonomous aircraft piloting systems. Very few startups are working in this area. One of them is San Francisco-based xwing. Because xwing is working on a similar product, it landed in the 4th quadrant.
The future urban air mobility manufacturers (AKA electric vertical takeoff and landing or eVTOL) are potential customers of Daedalean, but at the same time they can decide to build a solution internally (so-called “homegrown”), so this is a risk — Quadrant 3.
Existing incumbents, like avionics system manufacturers, are classical partners for Daedalean (thus 2nd quadrant). They already serve the aerospace industry, but may be just beginning to explore the new technology. In fact, one of those players, Honeywell, invested and partnered with Daedalean.
Finally, the 1st quadrant. Here we placed players like automotive companies that may want to enter the aerospace business by building autonomous flying cars, and thus are new both to the market and the technology. You can find many announcements around this trend. Here’s one from Porsche and Boeing.
Once we had the competitors analyzed and plotted on the “friend or foe” map, we just copied the map to the “competition” slide.
Summary
Getting the “competition” slide right is definitely going to help you make a good impression on investors. It also indicates that you’ve done your due diligence when it comes to creating your company’s competitor analysis — a crucial early step for your company that shapes your product, positioning and go-to-market strategy.
If you haven’t done a competitive analysis yet, now is the time! Just remember: A good analysis will take at least a few days to prepare, involve many members of your team, and should not be a one-off activity. You will need to hold a series of customer interviews, research the market, and build an exhaustive list of all the solutions offered in the market.
Once you’re done, I encourage you to plot all the players on a landscape map. This map will serve as the basis for your “competition” slide. While there are many ways to create such a map, as an investor I find it very useful to see a competition slide map that not only tells me who the other players in the market are, but also just how “dangerous” each of them is, and whether there is a way to diffuse the risk in each case by, for example, partnering with them.
And trust me when I say that that is a much more insightful and helpful slide than the one you get by just sticking your logo in the famous upper-right corner.
Big thanks go out to Nadja, Nicolai, Lars and Sally for providing feedback on earlier versions of this article. Many thanks to Alessandro for the colourful illustrations.
About Yair Reem
I am a founder, investor, board member and sparring partner to entrepreneurs across the globe. Engineer by trade, a Storyteller by heart. I engage with leadership teams to craft a narrative — a compelling and authentic strategic story — to power success in sales, marketing, fundraising and recruiting. Together, we design winning pitch decks, frame communication strategies and build go-to-market plans. I am also passionate about climate action and investing in technologies that can help reduce greenhouse gases emissions. To learn more or get in touch, visit www.yairreem.com
