On Competitive Advantages

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?

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