An inevitable question that founders face is “how is your product different?” Whether it’s asked explicitly or not, most investors that you speak to have probably seen or heard of a company that does something pretty similar to yours. So it quickly becomes necessary to articular how you plan to stand out in a world of options.
More important than what you say is what you actually do, and how your prioritization manifests itself. But I find that the way one talks about differentiation tends to reflect their approach to their product.
Probably the weakest strategy as an early stage company is to try to be a “swiss army knife”. This means creating something that tries to win on combining a myriad of different benefits into one product, but often failing to deliver on any one benefit really really well. Swiss army knife products also tend to be very focused on the availability of features. Swiss Army Knife pitches sound something like:
“We have XYZ feature but our competitors do not”
“We are launching XYZ feature in a month, which will really make a huge difference”
“There are a lot of point solutions out there, but we are a one-stop-shop”
The problem with this strategy is that it doesn’t usually play to the strengths of a startup company. Big companies tend to be pretty good at building swiss army knife products. They have big development teams that can bolt on ok-but-not-great versions of most of the obvious features. If they have a pretty big existing installed base of customers, those users are probably willing to live with a sub-par version of a feature for the convenience of not switching.
I find that the most successful early stage products tend to win by doing a narrow set of things really really well. They may really nail the needs of a particular user segment, or take an existing valuable feature and execute on it in a very unique way. Usually, this approach comes with trade-offs, and building something really great in a narrow way means giving up the opportunity to serve a broader set of customers. They usually give up on being a one stop shop, and instead try to become a shop worth making a detour for instead.
Carrying the swiss-army-knife analogy further, I like the image of Arya’s Valyrian Steel dagger in GOT for startup products. It doesn’t have a nail file, or tweezers or a toothpick. And it isn’t very big or particularly useful in large scale combat. But it does a few things really really well, and was the blade that (SPOILER ALERT) ultimately ended the reign of the night king and saved the day for the entire GOT universe.