How should early-stage founders address well-funded competitors when pitching venture capital investors?

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Hi,

Bring up the elephant immediately. Investors hate surprises, and pretending Lumber doesn’t exist makes you look naïve. Absolutely own it upfront.

But don’t pitch “we’re smaller and scrappier.” That’s not a strategy. Pitch: “Lumber validates this market, but their acquisition-driven platform creates a gap": then be explicit about what that gap is, why you fill it perfectly, and then (most importantly) why that gap is big enough to be interesting, and not simply a left-over crumb. It needs to be the foundation for a venture scale business. And you have to be honest about that, because knowing there is room for you to maneuver is not just important for an investor - it's something that you need to be clear eyed about before you spend years on something that is going to be almost impossible to make headway with..

So focus on three things:
1. You know exactly which customer they won’t serve well.
2. Your wedge is narrow enough to win quickly.
3. That wedge expands into something meaningful.

At Netflix, Blockbuster was always in the room. But our pitch was customer pain: late fees, limited selection, inconvenient stores - all things we had a credible argument that Blockbuster wouldn't be able to address..

That sounds neither scared nor delusional. It sounds focused.

And focus, not funding or "scrappiness" is usually the underdog’s unfair advantage.

Good luck,

M