I just stumbled across a fantastic series on bad startup pitches from Jason Cohen’s blog. It’s titled “5 lessons from 150 startup pitches“. I find myself agreeing violently with 3 of the 4 points that relate to competitive advantage.
I had a recent conversation with a friend who is working on a pitch for a new venture. The product concept is a good idea, but the way it is currently presented, it veers dangerously close to the offerings from a couple of competitors. When I asked what the competitive advantage was, the answer was quite diffuse: “we have Feature X, that’s our differentiator.” “Our UI is so much better than theirs it will blow them out of the water.”
It gets worse: “Company X is charging $Y for a substantially similar service. We are going to come out of the starting gate charging 50% what they charge.” At some point I will write a post on what not to do in pricing strategy – but that’s a conversation for another day.
So what qualifies as valid competitive advantages? Here are some candidates.
- First mover advantage – you are the first to solve this particular problem in this particular way. (This could work for and against a business though. It’s much easier to launch a product into an existing category than to make your own product category.)
- Deep knowledge about your target market’s needs and wants, enabling you to build something that solves their problems better than the competition has solved their problems.
- Special soup technology nobody can easily copy, even if they hire away your chief engineer or read and understand all of your published patent applications.
- Deep relationships with big fish at key potential customers (if B2B) that gives you a big head start on business development.
- A team with domain expertise that can execute at twice the speed of their competitor’s team.
What are some competitive advantages you have enjoyed in your experience?