What investors look for on a competition slide
Sequoia's own pitch guidance gives this slide two lines: list your direct and indirect competitors, and show that you have a plan to win. That's the whole brief. Everything else is execution.
The first half tests whether you've done your homework. The second tests whether your advantage survives contact with a competitor who notices you. A slide can pass the first test and still fail the second, which is exactly what the top-right-corner 2x2 tends to do.
Leaving the slide out is worse. Lily Lyman, a partner at Underscore VC, puts it bluntly in the firm's guide to building this slide: when founders say nobody else is playing in their space, she assumes they're "either ignoring part of the market or you don't know it." Neither reading helps you.
The problem with the magic quadrant
Aaron Dinin, who teaches entrepreneurship at Duke, calls the competition slide his least favourite slide in every deck. His objection is simple. When the startup gets to choose both axes, the startup always ends up top-right. He makes the point with a mock chart ranking the best articles on Medium, where one axis is written by someone with the first name Aaron and the other is written by someone with the last name Dinin.
That's the trap. A reader can't tell whether you've found two dimensions that really decide the market or two that happen to flatter you. So they assume the second.
The 2x2 isn't dead, though. It works when a competitor couldn't move into your quadrant without breaking their own business. Which brings us to format.
Pick a pitch deck competition slide format
Underscore VC sees four approaches in the decks it receives: the 2x2, the Venn diagram, the feature matrix, and the ghost (no slide at all). Here's how I'd choose between the ones worth using.
- 2x2 matrix: use it when you have one or two structural advantages, such as a business model or a data asset, that incumbents can't copy without cannibalising themselves
- Comparison table: use it when you win on several customer benefits and can put numbers on them
- Venn diagram: skip it. Underscore's Richard Dulude says these slides "are often confusing" because they show you sitting between competitors without showing why you'll beat them
- No slide: only defensible in a market so new that the real competitor is the customer's current workaround, and even then that workaround belongs on a slide
How to choose axes that aren't self-serving
"The best 2x2s use the axes to convey what competitors could never do," Dulude says. Generic axes like product functionality or business size fail that test, because any well-funded competitor can move along them.
A quick check I use: for each axis, ask what a competitor would have to give up to cross it. If the answer is "nothing, they'd just build it," the axis is decoration. If the answer is "their pricing model" or "their enterprise sales team," you've found something.
Then draw the chart your biggest competitor would draw. If their version puts them top-right on axes a buyer would also recognise, you need to address that in the room. Better you raise it than the partner does.
How to build a comparison table that reads fast
Dreamit argues for this format, which it calls a Power Grid. Your company goes in the left-most column. The next three columns hold the competitors an investor is most likely to ask about, in that order. Rows list customer benefits, ranked by what customers care about most.
Dreamit suggests five to ten rows. I'd aim for the low end. Ten rows on a slide means body type at a size nobody reads on a phone, and Underscore's warning about feature matrices applies: without ruthless ranking, the slide turns into a catch-all. Dulude notes there are usually only one or two attributes that let a company win over the long term. Put those in rows one and two.
Two of Dreamit's rules I'd keep exactly as written. Quantify each benefit wherever you can (a percentage beats "faster"). And leave a competitor's cell blank when they lack the benefit, rather than filling the table with red crosses. Blank space is easier to scan than a wall of symbols.
Design details that decide whether the slide works
This is where most competition slides lose the reader, and it's the part the ranking articles skip. A competition slide carries more separate items than any other slide in the deck, so hierarchy has to do the heavy lifting. The general rules are in my pitch deck design guide; these are specific to this slide.
- Write the headline as your claim, e.g. "The only option priced per location", so the reader knows what to look for before they look
- Give your column or quadrant the single accent colour and keep every competitor in grey
- Use logos at one consistent height, in greyscale, so no competitor's brand colour competes with yours
- Include the status quo (spreadsheets, an agency, doing nothing) as a named competitor, since it's often the one you actually lose deals to
- Label the axes in plain customer language, never internal jargon
- Keep text at 18pt or larger and cut rows until it fits
Where the competition slide goes in the deck
In the ten-slide structure I use, competition sits after the business model and before the team. By then the reader knows what you do and how you make money, so they can judge the comparison properly.
If competition is the first objection every investor raises, move it earlier. Reid Hoffman did this with LinkedIn's revenue question, answering it right after the title slide, and it's one of the moves worth copying from the famous decks I annotated.
One more thing about the sent version of the deck. Underscore points out that an emailed deck read without you in the room risks an investor misreading your competitor analysis. That's the case for a claim-style headline and a one-line caption under the chart: they carry the voiceover you won't be there to give.