Don’t waste your time on market comparisons like you see them everywhere. Here’s how to create one that’s actually useful instead.
The first step towards making things better, is to make better things. But ‘better’ isn’t only up to you.
There are so many business plans and marketing pitches I’ve seen where the concept is compared to 2–4 alternatives in the market. They have those nice little lists with checks and boxes. I’m sure you’ve seen them too, as they’re used in online product offerings all the time. (Looking at you, SaaS!)
They look a little like this, and most of them are absolutely rubbish. Please don’t send me one of these.
Here’s how you can quickly spot if the comparison is likely to be meaningless: the concept under consideration has a checked box in every single row.
This shows that the person who wrote this pitch likely just listed the features they have, and then asked whether other people offer those features too. And that spells trouble (even more so when the product isn’t significantly more expensive). You’re showing me the product from your point of view. You — the maker. And you are not the market.
You’re not showing me a market comparison, because you are not showing me the market’s comparison, but your own instead. And you aren’t in the market for this product.
Here’s what I like to see in a good comparison of alternative options:
1) Your product isn’t the obvious best.
Because it never is. Not for everyone. But it could be the best for some. So show me what others are offering that you’re not, because that way you’re giving me hints as to what your minimum viable audience specifically cares about more than the general market does.
(Again, this is 10x more true when you’re not wildly more expensive than all the other options.)
2) The items are justified.
Why are those items on the chart? There is no way you could list every possible dimension imaginable that you and your alternatives might be compared on; even if you’d manage to imagine them all, your list would be impossibly long. So why are these on here? Sometimes the choices need to be justified explicitly, and sometimes not. Here are three good tests you can do:
- If one of the other companies you are comparing yourself to made one of these lists, would it likely look the same? (If not, then you need a good reason why not.)
- If asked to do so during a pitch meeting, do you feel equipped to defend each individual line item (including omissions)?
- Would a potential customer list their options the same way?
3) Is there space for disruptive innovation or a blue ocean innovation in this market?
If you’re not familiar with the concepts: disruptive innovation (as coined by Clay Christensen) is about offering less for less, out of a belief that the market is dominated by options that have features that some share of the market would be happy to go without in exchange for more attractive pricing (often — but not always — driven by new ways of producing).
Blue ocean innovation is about offering different, by not offering many of the things that the alternatives offer, but also offering some new facets that no-one else is.
I always look at a market overview asking if there is space for either of those strategies. Because if I can spot the opportunity, then someone else can too. And if your offering isn’t the one taking in that space, then how will it affect you when someone else does?
(Now that doesn’t mean it’s bad if you’re not the one shifting the market that way, but you do need to be able to talk about how that might affect you.)
So yes, please do make charts that show how your offering compares to the alternatives. But please do it from the user’s point of view, not from yours as a creator.
Doing so is a great way to get clarity in your own thoughts. It is also a great way to demonstrate how you understand the market you’re in — be it to investors/partners or to potential clients.
And don’t be shy to show us. I or one of my co-investors would be happy to go over your business plan.