As a founder, it's crucial to communicate your company’s unique approach and competitive advantage to customers and investors clearly and confidently. Here’s how you can effectively highlight why your business is different, and how you’ll sustain this advantage over time.
1. Position Yourself as Unique – and Understand the Difference Between Alternatives and Competitors
When talking to customers and investors, emphasize that while there may be alternatives, there are no true competitors taking your exact approach. This is key to establishing your uniqueness. Frame the conversation by focusing on what makes your company different.
For example, you could say, "Our customers tell us that we're unique in XXX. While there are alternatives, they’re not true competitors because no one else is tackling this problem the way we are."
2. Focus on a Bifocal Competitive Advantage
Your competitive advantage should be bifocal, addressing both short-term and long-term strengths. This approach not only builds immediate credibility but also shows how you’ll stay ahead over time.
Short-Term Advantage:
Explain why you’re currently the best option. This could be due to technology, speed, accuracy, or depth of insight. For instance, “Our approach is 10X better because X.”
Highlight your team’s experience. Make it clear that you have the expertise to deliver value that others can’t easily replicate. “Our team has X years of experience in this vertical, making us the best company to solve this problem.”
Long-Term Advantage:
Describe how your advantage grows over time through network effects. A network effect means that as your customer base grows, the value of your solution increases, benefiting all customers and strengthening your position.
Be prepared to address questions about how you’ll defend against fast followers or incumbents. By scaling with a network effect, you create a barrier that keeps competitors from easily replicating your approach. “At scale, we’re positioned to unlock a network effect that strengthens with each new customer, making it difficult for others to match the value of our network.”
3. Share an Example of the Network Effect in Action
Many founders find it helpful to share an example of a company with a strong network effect (like Airbnb, LinkedIn, or Uber) to clarify how their own network effect could work. This helps investors and customers visualize how your advantage grows as your business scales.
Example Statement: "Similar to how LinkedIn becomes more valuable as more professionals join, our platform will deliver increasing value to customers as more people use it. This makes it tough for others to offer the same benefits without starting from scratch."
Credit: Ravi Belani