That Magic Quadrant Can Make You Disappear
The Competition Slide is trickier than it looks.
Once Upon a Pitch Problem #10 (continuing the Competition Slide breakdown)
You crawl in bed, anxious and nervous, pulling the covers over your head and pray for sleep. You toss and turn, twitching and jerking, half asleep and half awake. You close your eyes again and that same terrible dream starts over, like a vertigo nightmare from a Hitchcock film. The Competition Slide. . . you flinch . . . Magic Quadrant or Power Grid . . . you throw out your arms thrashing to make it stop . . . the upper right quadrant, glowing peacefully, suddenly transforms into a life sucking black hole, violently pulling you in . . . you whimper . . . you cover your ears as helpless green check marks scream in agony while being eaten alive by monstrous red X demons . . . you give up on sleep. You get out of bed, turn on your computer and face down the Competition Slide.
Solutions
The Magic Quadrant sleight of hand. The Magic Quadrant is a two-axis graphic, creating four quadrants, in which the business you are pitching is always in the upper right quadrant (the Magic Quadrant) with the competitors scattered throughout the other three, less desirable quadrants. For example, on the horizontal X axis, you label “Terrible Customer Service” on the left side and “Terrific Customer Service” on the right side. Then on the vertical Y axis, you label “Online and Easy” at the top and “Manual and Laborious” on the bottom. Abracadabra, your startup is now in the upper right Magic Quadrant of “Online and Easy” with “Terrific Customer Service” and the competitors are fatally elsewhere. The Magic Quadrant is a neat trick because the audience visually perceives your little, no-nothing startup as vastly superior to competitors like Google or Apple. This same neat trick though runs the risk of harming your credibility because your investor audience already knows the secrets of the Magic Quadrant illusion. For mature, later stage companies, the visual display of a complex market on a Magic Quadrant can be magical provided (1) the data for the slide is supported by independent (and footnoted) third party market research and (2) the axes labels are accurate and strategic. It can also be used for early stage companies just starting out to lightly sketch the future provided (1) the axes are labelled with core business benefits like product features, distribution, or customer acquisition strategy and (2) the competitors include incumbents who already service the customer in adjacent markets and could easily expand into the offering. Then, abracadabra, the Magic Quadrant makes your investors’ concerns about you disappear, not your credibility.
The Power Grid blackout. The Power Grid is a graphic of vertical columns and horizontal rows in which the pitching business has glorious green check marks in its column and obnoxious red X marks stain the competitor columns. On the Power Grid, you list your company and then each competitor in the horizontal row across the top of the grid, with each company separated and sitting atop its own vertical column. Then to the far left of the grid, you title each horizontal row with a different feature or fact. You massage the row titles carefully until you can successfully put all green check marks in your company’s column and as many red X marks as possible in the competitors’ columns. Because the pitching company controls who and what are in the columns and rows, the Power Grid is often ridiculous. I could make a Power Grid that has this newsletter eclipsing the Library of Congress, Encyclopedia Britannica, the Library at Alexandria and the House of Wisdom by making the features “You are reading it right now,” “It starts with Once,” and “Rafferty Jackson wrote it.” If you are in a feature-rich market segment like software, automobiles, food, or CPG, where you can identify measurable differences easily (think API integrations, miles per gallon, calories and fit), then a Power Grid can be exactly that, powerful. If you are in a more nuanced market segment requiring consumer or customer behavioral changes or global economic development of new industries and regulations (looking at you space startups), then be careful, the Power Grid may fail and blackout your credibility.
“Once upon a time . . ..” Stories set a stage with identified characters, in a location, at a specific time. The Competition Slide is an asymmetric storytelling heresy; the story of a startup is imagined, envisioned and only exists in a future state many years away while the story of the competitors is concrete, tangible, and present. The future fiction of your startup comparing itself against the current non-fiction of incumbents creates an irreconcilable rift in time and place, destroying basic tenets of storytelling. Perhaps that is why the Competition Slide diagrams above can be either treacherous or helpful. On the Competition Slide, step back to first principles and focus on the customer problem you are solving, that is the heart of your story. Now ask yourself, how do I help the audience understand what the world will look like in five years when we are successfully selling our product and solving customer problems? Who else will be selling products to solve these customer problems? There is no magic trick or power play on the Competition Slide: just business fundamentals of who plans to solve the customer problem and how, set in an unfortunate but manageable storytelling time warp, where the future and the present exist simultaneously.
What They Said
The competitive slide should be about the landscape and less about the startup.
Our research revealed that founders should not treat the competitive slide as a billboard to say “we’re the best of the best.” Rather, investors recommend to provide a realistic and accurate overview of the market. The startup’s strategic advantage only comes secondary to this.
The six recommendation categories found in the study are:
Honest landscape - 41%
In-depth research - 31%
Realistic expectations - 10%
Customer POV - 8%
Benefit-focused - 6%
Strategic Advantage - 4%
The key takeaway?
Be honest and be well-informed. The competitive slide is a visual to show who the key players are and what are the areas they excel in. It’s best for founders to start an earnest conversation with investors: why does the startup focus on a particular benefit vs the competitors? Here, founders can show their in-depth knowledge in the market and they can win plus points for being honest and self-aware. - Keane Angle & Louise Saludo, 6 Powerful Things To Include [sic] Your Competition Slide Needs to Ace Investor Meetings, August 5, 2021 on Storypitchdecks.com.
See You on the Track
Rafferty Jackson
Author The First Principles Pitch, startup storyteller, board member, advisor and investor. Once Upon a Pitch is a weekly newsletter looking at one business pitch problem and offering storytelling solutions to help solve that problem.