This article is Part Two of our report on the Competition Slide. Here we’ll dissect expert opinions on which visual is more effective in presenting the competitive landscape. Read Part One of our study to learn investor expectations on content.
As we dig deeper into expert opinions on the competition slide, we found that the discussion surrounding its design aspect is more nuanced.
The resources we’ve gathered are conflicting: some resources prefer the classic quadrant, others like the benefit-focused power grid. Meanwhile, some suggest a hybrid of both.
Either way, each of the recommendations have caveats from investors and consultants.
Founders can easily skew the competition slide in favor of their startup. Because of this, investors have mixed feelings on every visual we’ll discuss today. It seems like there is most definitely no silver bullet or one-size-fits all when it comes to talking about the competition.
Now, onto the methodology.
We searched the web for 25 credible resources from verified the authors. However, only 20 tackled the design aspect of the competitive slide. Out of these 20 resources, 8 remained neutral and offered no clear recommendation on which visual was best. They simply mentioned the visual and discussed their expectations on the slide’s content.
Due to the complicated discussion surrounding the competitive slide design, STORY came up with metrics to analyze each opinion quantitatively:
Here’s a summary of each vote by visual:
Perhaps the most common visual for the competitive slide is the Magic Quadrant. It’s similar to the two-by-two cartesian coordinate system (x and y axis); except the axes are used to indicate strengths, weaknesses, benefits, or features that companies offer.
The discussion on the Magic Quadrant is complex: some recommend it, some have reservations, and others just hate it.
Those in favor of the Magic Quadrant believe that it’s the perfect visual that provides an overview of the competitive landscape. According to these resources, the Magic Quadrant allows investors to see the key players within the market, where they succeed, and what their shortfalls are.
However, resources that veto the Magic Quadrant are wary of founders who abuse it to glorify their startup. As mentioned in Part One of our study, founders commonly use the competitive slide to showcase their advantage over the competition — and rightfully so. But investors advise against underestimating or downplaying the competition.
Investors always assume that the Magic Quadrant is biased as founders can cherry-pick specific axes. By doing this, Founders may run the risk of portraying irrelevant axes by focusing on features or benefits that the market may not be particularly interested in.
The Magic Quadrant is a spectrum that goes from black to grey to white; the chosen axes isn’t non-binary which can be answered by a simple yes or no.
Our resources advised to consider consumer behavior and the status quo when creating the competitive landscape. More of this is discussed in Part One of our study.
Overall, the Magic Quadrant received 23 votes making it the most popular visual for the competitive slide.
Despite the mixed reactions over this visual, we believe its popularity can be attributed to classic pitch decks such as AirBnB.
“Magic Quadrants are wonderful visuals of a sector and a simple way to appreciate a positioning in the market.”
Paul O’Brien, CEO of Mediatech Ventures
“If you present your competition slide as a Magic Quadrant, you'll do your company a major disservice. Why? Because when an investor sees a Magic Quadrant, they'll think; Can your company actually only differentiate its product on two axes? Does your product beat the competition on just two key benefits or strategies? If that's the case, and your product isn't much different from your competitors, why will people buy it or use it?”
“There’s a reason the 2x2 matrix is cliche - it works for well understood industries where the size and segments of the market are understood and the typical disruptive innovation is a price/performance breakthrough, like this one for Pure Storage.”
Tomasz Tunguz, VC at Redpoint
“Normally this slide is very insightful to VCs. However, too many times I see founders carefully choosing the variables in the x- and y- axes so that they are in the winning top right corner, and their competitors are weakly positioned.”
Lylan Masterman, Venture Capitalist.
Harvey Poppel’s creation in the 1970s is still used in most competitive slides to this day. Harvey Balls are used to visualize and summarize data columns by shading certain sections within a circle.
The Harvey Balls visually present the degree of efficiency of each benefit through filled circles as shown below:
Surprisingly, Harvey Balls, along with the Value Chain, are the only visuals that did not receive negative votes from our resources. Although our resources have certain reservations when it comes to this visual.
Investors in favor of this visual believe it’s an efficient way to communicate qualitative data. It also tells investors more about strengths and areas of improvement in each player within the market’s space.
Alternatively, founders can use ️consecutive black and white circles to show how strong or weak each company is within the market on various features or benefits, like this:
Item A ⚫⚫⚫
Item B ⚫⚫⚪
Item C ⚫⚪⚪
Item D ⚪⚪⚪
However, some investors note that this visual can focus too much on features instead of providing a summary of the competitive landscape.
According to our resources, the Harvey Balls note that founders can just easily put full circles in each of their features while their competitors fall short in most aspects. We believe that the decrease of votes (7) for the Harvey Balls can be attributed to this.
“I noted that these are often used too narrowly because what we usually see in a pitch deck where these exist, is that the founder wants to convey how they're all full circles (or near enough) as they try to communicate how they're better than the competition. The objective with Harvey Balls is show both what you've accomplished or deliver better AS WELL AS what you've decided not to do or need help getting done.”
Paul O’brien, CEO of Mediatech Ventures
“Literally 90+% of Harvey Ball slides that I see presented to me have the presenting company with all the balls fully filled out and some weaknesses in your competitors. Why not take this opportunity to differentiate yourself in the VC presentation? Why not say, “look, I know most people just show themselves with all the benefits and competitors with all the weaknesses, but here is a realistic view of where we’re at today” and show some weaknesses. It will be a great chance to build rapport with the investor.”
Mark Suster, VC at Upfront Ventures
The most common alternative to the Magic Quadrant is the Power Grid. It’s a table-based visual that provides an overview of how startups stack against their competitors.
The Power Grid is also known as the feature-function matrix where founders use binary differentiators, (✅ or ❌) to show the absence or presence of certain features. Unlike the Harvey Balls and the Magic Quadrant.
As we expected, our resources have mixed reactions to the Power Grid. This will be a common theme throughout this report as it’s truly impossible to please everyone.
Resources that favor this competitive visual believe it provides clearer differentiators between the companies within the market’s space. A simple tick mark can indicate the presence or absence of a certain benefit that consumers truly care about.
On the flip side, investors who dislike this visual believe it’s inappropriate as it tends to focus on features vs. benefits. According to investors, this visual diminishes companies to features when there are many factors at play in terms of the competitive landscape. We believe this is the reason why the Power Grid ranked 3rd in our study with only 6 votes.
Investors advise startups to consider business model, distribution model, pricing, and more when making the competitive slide.
“So, my perspective is that the best way to project a competitor’s slide is the feature-function-value matrix. Show you have a really solid understanding of your feature set. Cheaper-faster-better, not features. It’s about being able to articulate what is it that is really going to make the customer value your product over somebody else.”
Wayne Embree, EVP of Rev1 Ventures
“These sorts of comparisons don’t really give a clear understanding of the important differentiators — often it is quite the contrary. A feature is not a sustainable differentiator. With some money and resources, every competitor could replicate your oh-so-great features. Ticked checkboxes don't really tell me anything, in fact it could be a sign that your product is not focused enough. All your competitors could come up with a similar benchmarking table, just with a different set of features that their product has.”
Iskender Dirik, Managing Director of Samsung Next Ventures
“Instead of using a Magic Quadrant to show how your startup compares to the competition, you should use a Power Grid. (It) enables you to show how your startup beats out the competition in areas like its key benefits, go-to-market strategy, business model, and more.”
“In 99% of the decks I see, founders use either a two axis chart (inspired by Gartner’s Magic Quadrant) or a power grid table to highlight the superiority of their product. If they use the table comparison, their product is the only one that receives all the [check marks] or full circles. So: Their product is the best, life is good, let’s move on, right? No!”
Yair Reem, Partner at Extantia Capital
Since the rest of the recommendations have acquired significantly less votes, we decided to give a brief rundown on each visual.
The Value Chain.
As pictured below, the Value chain offers an overview of current alternatives in the market. The value chain succeeds in portraying the status quo. This visual works great for startups who don’t have much in terms of direct competition. However, investors note that these startups are rare; we believe this is the reason why the value chain only received 4 votes in our study.
The Petal Diagram
Simply put, the Petal Diagram is the complicated cousin of the Venn Diagram. It uses a benefit-focused diagram to show in which areas the competition excels. At the heart of this landscape is the startup in question which highlights how they provide all benefits that other competitors don’t have. Because of this, Entrepreneur and Duke University Professor Aaron Dinin calls the feature-focused Petal Diagram “even more selfish than self-defining the axes in the magic quadrant.”
We’ve noticed a few trends in the argument surrounding the competitive visual:
As our report indicates, founders simply can’t please all investors. We can see from this report, there really is no gold standard when it comes to the competitive slide, or for pitch decks in general.
We believe that investors don’t fixate on the slide visuals, instead, they use this to throw questions to see how well-versed and aware founders are on the key players in their market.
At the end of the day, founders can freely choose to a visual to show their landscape. Our resources even suggest that founders get creative with their competition slide. However, we recommend the Magic Quadrant, the Harvey Balls, the Power Grid, or the Value Chain.
More than the visuals, investors emphasize the importance of in-depth research and realistic landscape when creating the competitive slide.
Founders who come ill-prepared or present a biased competitive slide run the risk of getting caught off-guard by investor questions. As we’ve mentioned in Part One of this report, founders should start an earnest conversation with investors on the competitive landscape. Doing so will help convince investors that founders are indeed ready and equipped to overtake the market.
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