The most common slides in investor pitches is the 2×2 market/competitor matrix.  There are many of them – you probably have one in your own investor deck.

Almost all 2×2’s look more or less the same.  The company’s logo appears in the upper right quadrant, and that space is usually wide open (or there is a good story as to why the other competitors in that region are weak).  

2×2’s are an effective way of conveying information.  But if not done properly, it’s kind of a waste.  Sometimes, investors will simply learn more by a very thoughtful analysis of how a company competes against the 3 or 4 companies that really matter. In that case, the 2×2 is not needed – a list probably is better.

But if you must use a 2×2, here are a couple tips:

1. Include all the relevant competitors.  And “more” does not = “all relevant”.  Good investors will do their homework. If they find a relevant competitor that is not there, you look lame.  You sound smart when you can really speak intelligently about your competition at a level deeper than what you can read on their website.  And you feel dumb when the investor brings up an obvious competitor that you’ve never heard of.

2. Choose your axis wisely.  The 2×2 is actually an opportunity to distinguish yourself from others by providing unique insight into your market.  Actually, I think that a really great 2×2 can summarize your entire view on your market and how you think you will win.  I think the axis you choose should be the core drivers of your business.  And if that’s the case, a discussion about your 2×2 can be the starting point of an in-depth discussion about many of the core strategic bets you are making.  The more uncertain the market is, the more interesting the discussion is about why you are deciding to locate yourself in a particular region of the chart. 

As an example, below is our 2×2 for NextView (not including the location of ourselves or our competitors).  Our axis are x = Investment Pace and y = % of capital in follow on rounds.  In our view, our decisions against these two axis drive almost all our decisions on things like BOD seats and tenure, dollars deployed, ownership requirements, team size and structure, etc.  An additional feature we include is categorizing the extremes in the 2×2.  The labels don’t apply to everything that falls into their respective quadrants, but gives a sense for what the extreme scenarios start to look like. 

This chart isn’t really rocket science, but when we present ourselves and others in our space this way, we find that it usually eads to a really interesting conversations more quickly.

In summary, I don’t think 2×2’s are a requirement – most of the time, they are wasted space.  A list often works just fine, but a 2×2 is an opportunity to frame the conversation in an interesting and productive way.