Presenting the Competition

After companies have done their research and have a list of direct and indirect competitors, they need to think of an effective way to present this information in a pitch deck. There are many ways to do this and they all have their advantages and disadvantages. Here are a few of the most common:

The Magic Quadrant

Competition is based on two main metrics. Have a look at the example below for AirBNB (or AirBed&Breakfast as it was in the beginning). They’ve chosen to use the metrics of cost and whether the transaction is online. And therein lies the major issue with the Magic Quadrant – the company gets to choose the metrics it uses to measure itself against the competition. This inevitably leads to startups choosing the two metrics that make them look the strongest, but may be completely irrelevant to the competition. You’ll most often see the logo of the company who is pitching in the top-right of the diagram.

The Magic Quadrant can possibly be effective when used to present an existing market if it’s done honestly, the metrics are relevant to all the companies, and it is well researched. But for new startups doing things in innovative ways, you should generally beware this method of presenting the competition!

The Petal Diagram

OK, so having just two metrics can be an issue. So… more metrics? In the Petal Diagram, businesses are able to present the competition and themselves using more that two metrics. This is a great way of showing a startup as being the centre of the universe and indicating the various existing markets where the company can draw its customers from (even better if market sizes are calculated for each petal!). It could backfire… having a startup in the centre also could look like it is surrounded on all sides, in all markets by big name brands and gorilla-esque incumbants. Eek!

The Petal Diagram has other limitations. It’s not as much a way to show how a startup differentiates itself from the competition as much as it’s a good way to showcase the ecosystem that the startup is operating in – important, but so is showing how you’re different.

The Checklist Chart

The current favourite of VCs, the checklist chart effectively showcases a company alongside its competitors using a possibly endless list of features. and benefits. It’s important again that the this is well-researched, includes the most relevant competitors, and focuses on benefits over features (although key features should be included). The below gives an example of how this could be displayed, and notice that the company here, Flowtab, has focused heavily on features and mainly selected features where they’re the winner. But they have included a feature that they don’t have which others do – POS Integration. Cherrypicking features is still something to watch out for though!

Major takeaways for founders:

  • Always, always, always do your research
  • Present yourself in the best light, but don’t do it in a dishonest way
  • Don’t bitch about the competition – you never know who you’re pitching to
  • Be prepared for investors to do a lot of due diligence on the competition so don’t try and leave out or ignore competitors. Find ways that you’re better than them.

Takeaways for investors:

  • Always, always, always do your own research and due diligence on competitors
  • Never take a competition slide at face value