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Competition is a healthy sign that validates if there is a demand in the market. Which means you can scale quickly — If you hit it. If the investors’ question about the competition, you should not feel that they are attacking you or treating you as inferior. The idea of asking competition related question is to find out where your product is positioned in the market.

With competition related questions, the investors are only trying to understand if you have a strategy to deal with the competitors. Even if you are entering a crowded market, you should not be nervous. The main goal is to ensure that you are adding value to the existing market.

Being Defensive about the competition sends out terrible signals. You are likely to be seen as insecure, closed-minded and overly emotional. None of these labels is going to create a positive impact on your pitch. While it’s important to mention and appreciate the competitors, it is mandatory to bring the conversation back to your product’s core value.

Rules you can follow to avoid coming out as defensive:

DoorDash Competition Overview
  1. Give a comprehensive outline of the competition: Even if you can’t talk about each of your competitors, talk about the top 10 significant ones. Be aware of the ones that are not in the slides. Not knowing who people are can be a bad sign, indicating that you don’t know about the industry. You should never say, “We really don’t have any competition in this space yet”.
  2. Don’t bash the competitor: If you are only talking about how superior and special you are, it just shows your overconfidence.

Startups don’t win by attacking. They win by transcending. There are exceptions of course, but usually, the way to win is to race ahead, not to stop and fight — Paul Graham

Talking about your competitors with respect and humility shows your confidence and greatness as an entrepreneur. The investors may understand that you are confident about your company, without a need to humiliate others.

3. Highlight your Differences

If you have competitors and they are successful, your market is already proven. Your goal should be to express the value that you add as a startup. Talk about the unique point of differences that may interest your customers. You can do the same exact thing as your competitor, but what matters is the extra value that you add.

Eg: An eyeglass startup CEO was asked about how different his product was, then that of Warby Parker. He started by calling Warby Parker a great company. He appreciated Warby Parker for its contribution to the eyeglass industry. Then, he explained how their product was different. He talked about the unique features, reassuring that their product addresses a completely different market segment than Warby Parker. His response spoke volumes about him as an entrepreneur.

4. Talk about your limitations against your competitors

Though it is important to talk about your value add on, it is equally essential to talk about your limitations and your strategy to deal with that. It is the entrepreneur’s ability to acknowledge his limitations, that makes him great. Investors want to work with a team who knows what they can and what they cannot do.

If your product is competing with a big player who already has a great reputation and the resources, don’t try to downplay that.

Eg: Stitch Fix, a fashion startup is competing with several other companies including Trunk Club ( A Nordstrom Company).Trunk Club is owned by Nordstrom, so practically all it’s offerings are also available on Nordstorm.com. People who are only into big and popular labels would prefer Trunk Club. Trunk Club has the resources to work with the expensive labels, that Stitch Fix may probably not have at this stage. It would be advisable for Stitch Fix demonstrate their awareness about their limitation.

On the other hand, Stitch Fix focuses on its exclusive products, that can’t be found elsewhere. Instead of competing with Trunk Club for the wide range of big labels, it chooses to highlight its affordable prices and exclusivity of brands.

5. Demonstrate curiosity and accountability: If you feel like your instinct to react defensively is triggered, suppress it with a deep breath. If your investors are asking about your competition, listen to the questions. Have an open mind, show some curiosity. There is no such rule that you have to be the best. Your competitors will have their strong areas and so will you. If the investors mention something about the competition, that you are not prepared to answer, express your enthusiasm to learn.

Examples of Defensive Reactions, that may turn off the Pitching Investor immediately:

  • Talking quickly and running through unrelated points, to divert the question.
  • Not listening to what the investors are saying and going on and on about what you had planned to say.
  • Finding justifications ( XYZ already has this product in the market BUT their quality is poor).
  • Just staring at the investor and smiling/nodding, with a hope that he stops asking.
  • Crossing arms

To Conclude:

Getting control of your defensive reactions will improve the quality of your pitch and ultimately enhance your perceived value to the investors. The more time you spend on highlighting your competitor’s limitations, the less time you are talking about your company’s strengths. You want the investors to focus on you, while also demonstrating your solid knowledge of what it will take to be successful.



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