Okay so perhaps implying that you might be a moron is a bit harsh but let’s be realistic, as a startup in need of funding, if you fail to secure that funding simply because you haven’t done your homework or your failure to communicate effectively, you’re a moron.
I’ve explored in the past, quite a bit about what it takes to effectively position and communicate what you do. When raising capital, what and how you communicate is arguably more important than your validation and traction. How you communicate your own business, is a reflection of who you are and I’d hazard a guess that you aren’t a moron; while you could possibly pitch your startup more effectively, your pitch and how you communicate it is quintessentially you. So what part of a startup pitch might make you look like a moron? How you position and communicate what “they” do.
Invariably, your competitors slide is abysmal
Looking something like what I have here to the right, what makes you look like a moron is suggesting that you do everything while your competitors fall short.
Even worse is when founders suggest a price point that’s lower than everyone else: “We’re better, more developed, and less expensive!”
While you may believe it, it’s very unlikely true; more importantly, you are subconsciously communicating a few things that will torpedo your burgeoning investor relationship.
How Competitors Slides Kill Conversations
Consider three messages conveyed in such a slide and be certain that you’re conveying what you want construed.
1. Yes, we actually do everything! And our competitors (those morons) are overlooking something obvious.
Really? That doesn’t even pass the sniff test. Forget whether or not it may even be true, you’re suggesting to potential investors that your competitors are just blind to opportunity that you discovered? That they haven’t invested in and tried many of those things. You’re also conveying to an extent, that you don’t need their investment – “we already do everything.” A common reply from investors in such circumstances? “Great, let us know how it goes and we’d like to take another look when you have more customers.”
You really do everything? At a lower cost?
2. Okay, truth be told, we haven’t done any in depth research and we’re just giving you the cursory us vs. them slide
In offering no sophistication in how you position the competition, you suggest that you haven’t really looked into what they do and are merely marking the haves and have nots. Why do I say that? Since we abandoned software for the internet, we’ve evolved into an economy of iteration. Products are never done. Services are never fully baked. Everything is in development.
Just as you want to avoid accidentally communicating that you don’t need money because you already do everything, it can’t be true that your competitors simply have or do not have various features. You each are working along a spectrum toward the delivery of various benefits and a sophisticated founder (who has done the marketing to know their competitive landscape) would understand where along that spectrum one’s competitors fall – while understanding that there is also value in communicating that your own startup is also along that spectrum to varying degrees.
3. We haven’t planned strategically about where to prioritize and invest our resources
See the challenge conveyed in our last point? If your market is so black and white as have and have not, you fail to convey that you are making strategic, planned, and intentional investments to develop the product the market actually wants. The market rarely wants everything. What are the features that you’ve deemed irrelevant, too costly at this stage, or deprecated?
Instead of saying that you’ve unwisely decided to invest your precious time and resources in everything, point out what you’re avoiding and foster a discussion of why you don’t want to waste your time there. Explore your competitors’ gaps to the same extent, and communicate why Competitor A can’t acquire customers as efficiently (yet) while Competitor B has invested in infrastructure and features they must now maintain. You have an edge because you don’t do everything and because you are deliberate about how and where to spend your time.
Doreen Bloch, CEO of Poshly, puts it well in a great review of the 8 things you should never include in a pitch deck that StartupCollective’s Scott Gerber pulled together, “An in-depth competitive analysis shows that the startup team understands the market and the competitive advantages that will be required to win in the industry.” I’ve bolded some of the text to draw your attention to my perspective on her point.
Upfront Ventures’ Mark Suster suggests using the two-by-two matrix or Harvey Balls which establish your relative position and helps distinguish you from competitors, rather than erroneously positioning you as simply better. He adds for consideration, “I hate when I hear companies say [we have no real competition]. In some rare circumstances it is conceivable that this is true but it is very seldom.”
Harvey Balls isn’t just a great name, it’s the sliced pie that you occasionally see in place of check marks: we’re half way done with this feature, fully finished here, just getting started with that one, and ignoring this entirely. You set the stage for a discussion of your investments – that which you’ve already made – and why you’re seeking additional investment. I think this approach is a little easier to develop than the matrix, which feels more subjective; either way, with this more sophisticated view of your competitors, you’ve moved the conversation from potentially looking like a moron to communicating your sophistication, insight, and opportunity.
Regardless of the approach you take, avoid the haves vs. have nots and shield yourself from the inevitable call on your bluff.