What differentiates your business?

I had the pleasure of meeting Steven Dietz from Upfront Ventures today at a Slush roundtable today. The discussion was focused around what differentiates one business from another and almost more importantly, as an entrepreneur, do you know exactly what that differentiator is? This is such a crucial question for someone on the other side of the table, an entrepreneur has to get the content and the delivery correct. What’s more, as someone who is living and breathing your business every day, you know the answer to this question. It should be easy, but it rarely is.¹

Same same, but different

As an entrepreneur, you spend a lot of time defending yourself against questions about how what you do is any better than competition. Whether it is human instinct or not, the most common response to competition is to provide a whole list of reasons with the hope that one of them jives with the customer as a satisfactory answer.

Listing a string of answers will give an investor the feeling that you might not actually know how you are different which demonstrates a lack of market knowledge. For a client, a long list will seem like a long list of small reasons to switch or consider your product. As an entrepreneur, you should have a clear, succint, unarguable answer to this question. If you give a clear answer to this, worst case is that it’s something that is a differentiator but maybe not an important one. At least you will have learned something and can pivot.

In terms of delivery, a rapid string of answers can come off quite defensive or even emotionally charged (“I’m offended you would even ask that question!”) - neither of which illicits a comforting feeling in the questioner. Whether a potential investor or a customer, any kind of defensive response is a sign of weakness, like a threatened animal lashing out. If you are better than competition, you should be calm, confident and succint about it.

Know your audience

Another important point that came out of the discussion was knowing your audience.

Different means something different to different people.

Your “differentiator” doesn’t have to be the same thing to everyone. An investor might value a technical advantage, IP or a customer acquisition method. A customer might just like the UI. Google acquired many of its early users just because of the fact that it was the cleanest home page and back when internet was running at 28.8k, no clutter meant faster loading times. Very few noticed the clever technology of the backend.

What’s more, one customer might like your UI and another might like the clever backend algorithm. The trick is being able to appeal to all those customer types and being simultaneously attractive to all of them. This is a key challenge faced by enterprise software businesses where, in order to close the deal, the software vendor often has to persuade different divisions of the customer organisation. There might be a business user, the IT department and procurement who are each looking for a different answer to justify why they need to buy your product.

So no matter what you do, you should have a list of all the potential types of conversations/demographics you might encounter and a clear differentiator for each. It should be a case of “Who are you?” and “This is why you need me.”