As you develop an understanding of the value chain you'll start to see a web of companies form together and interact with each other. Some companies work together with others to create a supply chain. When you start to compare companies to each other you'll see (1) adjacencies and (2) competitors.
Adjacencies are companies that work together and are sometimes dependent on each other. For example; UPS has long been an adjacent player to Amazon. Amazon focused on handling customer discovery and orders and UPS focused on filling those orders.
However, over time Amazon started to do more of its own delivery and companies that were once adjacencies can become direct competitors. This is very come when companies try to become platforms or "vertically-integrated," basically meaning they try and do everything in the value chain.
Amazon Could Soon Be The World's Biggest Shipping Company
Amazon (AMZN) kicked off the internet shopping boom in the '90s when it started shipping books. These days, you can click a button and get almost anything delivered to your door. Amazon sold $164 billion worth of stuff on its website this year.
- First, you need to have a working knowledge of the competitors
- Primary competitors are easy to identify because they compete on product
- How to do a competitive matrix w/ features
- Think about what is most valuable to the user. Look at reviews or industry reports. What actually matters?
- Remember that every pitch deck is going to have a sexy competitive matrix because companies will handpick based on what they have. You need to decide for yourself what is actually important.
- Secondary competitors are harder because they compete on customer pain
- One example is Airbnb. Marriott would've easily identified Hyatt as a competitor, yet Airbnb is their biggest threat. They don't have hotels (different product) but they target the same pain (stay away from home).
- Another example is Lime (scooters). Uber can easily identify Lyft as a competitor, yet Lime is a definite competitor. They don't have ridesharing (same product) but they target the same pain (urban mobility).
- Secondary competitors are the ones that kill industries because the industry doesn't know to look for them.
- For the reason, you need to really think about the customer pain, the use cases, and user profiles. Find all of the intersections. You don't have to list them out but make sure you think them through.
- Second, you need to know how you fit in and how you stand out
- This is what we call a moat
- This is where you need to spend a lot of time and this is usually what makes and breaks an investment
Ask yourself, "If i described my competitor and they were on a panel when i said it, would they agree with it?"
Tips & Tricks
- Practical "how-to's"
- Where to Look
- LinkedIn, Capterra, Pitchbook, Zillow
- Leader board of best content we've found
- Open to replacing it as we find better stuff