Pointing Out Flaws in Competitors Won't Win You Points With Investors

When you're making your pitch, you should showcase your expert knowledge of the market and your rivals from a position of strength.

learn more about Martin Zwilling

By Martin Zwilling

Opinions expressed by Entrepreneur contributors are their own.

Most entrepreneurs spend far too much time thinking negatively about competitors, and can't resist making derogatory statements about them to their own team, investors and even to customers. This approach only makes these important constituents question your integrity, intelligence and your understanding of business basics. Pointing out flaws in others does not give you strength.

Related: Win or Lose, Competition Always Makes You Stronger

As an investor, I always listen carefully to what an entrepreneur says, and does not say, about competition. Every business area has competition and every customer has alternatives, so a smart entrepreneur needs to acknowledge these as a positive in defining a big market, and position the features of a new solution in this context. Here are seven key ways to do this:

1. Frame the competition as manageable. Investors want to see evidence of your sustainable competitive advantage. They don't want to hear there are no competitors or a long list implying a crowded space. Use three generic categories, and relate your position to a key player in each.

2. Highlight your positives to suggest competitor shortcomings. Talk about competitors with positive statements about the advantages of your own product. For example, "While product X has worked well in the server market, my product also provides cloud support to drastically reduce IT costs and maintenance."

3. Emphasize intellectual property and a dynamic product line. Patents and trade secrets are more powerful advantages than missing competitive features, which might be quickly filled in as you gain traction. Be careful with the first-mover claim, since big competitors have deeper pockets and can accelerate to quickly eliminate your lead.

4. Demonstrate expertise on the range of competitors. You don't need to talk about every competitor, but you better know every one just in case someone challenges you. Do your research thoroughly on the Internet and with industry experts and advisors. Build your credibility by presenting information on competitor leadership and team histories.

Related: The Scientific Method for Entrepreneurs: 6 Steps to Long-Term Success

5. Become a thought leader on industry evolution. Make it evident that you have learned and evaluated competition from a higher perspective -- meaning the evolution of industry technology and trends. Show that you have thought about indirect competitors and alternative solutions, such as airplane technology versus a better train.

6. Develop a timeline showing continuous innovation. Make your competitive position a long-term advantage by presenting a timeline of technology evolution, rather than a comparison at the time of first rollout. Investors don't like an apparent "one-trick pony" or a momentary advantage that can be quickly overcome by smart competitors.

7. Position your solution in the world market. Every market and every opportunity these days is global, so successful strategies and positioning are done with that in mind. Your rollout needs to be focused and targeted locally in the near-term, but competition needs to be addressed in a much broader, long-term way.

Don't forget that the primary objectives of every competitive positioning are to demonstrate your business acumen and integrity, as well as the strengths of your solution. Any overly negative comments you make about competitors doesn't help you on either of these objectives and will kill your momentum with investors and potential customers.

Spot comparisons are also less and less valuable these days, as the market tends to change quickly, and competitors can pivot and recover just as quickly. Remember that smart competitors are likely working on new features with resources greater than yours, and timeframes to delivery that may be shorter.

In addition, thinking positively about competitors is what your customers will do, and what every smart investor or potential business partner does. You have to get on the same wavelength to optimize your solution, maximize your credibility and minimize the competitive risk.

Besides, being an entrepreneur who is full of negativity is no fun.

Related: Why (and How) You Should Befriend Your Competitors

Martin Zwilling

Veteran startup mentor, executive, blogger, author, tech professional, and Angel investor.

Martin Zwilling is the founder and CEO of Startup Professionals, a company that provides products and services to startup founders and small business owners. The author of Do You Have What It Takes to Be an Entrepreneur? and Attracting an Angel, he writes a daily blog for entrepreneurs and dispenses advice on the subject of startups.

Related Topics

Editor's Pick

Have More Responsibilities at Work, But No Pay Bump? Use This Script to Get the Raise You Deserve.
Black and Asian Founders Face Opposition at All Levels — Here's Why That Has to Change
Marketing

How This Podcaster Gets 10 Million Downloads A Month

Jordan Harbinger built a massive podcast audience. Here's what he did, and what other podcasters are overlooking.

Diversity

Are You a Performative Ally? Here Are the Signs.

True allies don't just say they're committed to diversity and inclusion — they show it. Here's how you can spot a genuine ally vs. a performative one.

Leadership

Here's the No. 1 Question White Leaders Ask Me About Black History Month

Five steps you should take during Black History Month -- and all year long -- to show up for your Black colleagues.