A Competition Slide that Closes Capital

I was asked recently if Facebook and Google are competitors, and the question being asked, struck me with as much alarm as hearing a startup founder say they don’t have competitors.

What most frequently gives an investor pause is a slide in a pitch deck that communicates that you’re not paying attention to your market and threats looming from alternatives.

Yes, without question, Google and Facebook are competitors.

Finding Success Starts with Avoiding Failure

The provocative claim has been made, “ competition is for losers,” begging a question not of whether or not that’s true but rather why it was said.

“ Every firm in a competitive market is undifferentiated and sells the same homogeneous products. Since no firm has any market power, they must all sell at whatever price the market determines. If there is money to be made, new firms will enter the market, increase supply, drive prices down, and thereby eliminate the profits that attracted them in the first place. If too many firms enter the market, they’ll suffer losses, some will fold, and prices will rise back to sustainable levels. Under perfect competition, in the long run no company makes an economic profit.”

- Peter Thiel