We’ve seen Gartner’s Hype Cycle diagram. Here’s another Gartner tool that I think will be helpful to founders, either as part of their strategic thinking or as part of an investor presentation.
I believe that positioning is the foundation of marketing. Until you can both understand and clearly position yourself any marketing – from web sites to social media – will be wasted. The Magic Quadrant is one way to position yourself, but not the only way, of course. The Quadrant is best for presenting where you fit versus your competition.
The Quadrant plots ability to execute along the Y-axis and completeness of vision on the X-axis. As with all B-school diagrams all companies want to be in the up right corner of the quadrant. The first and most important step is to define your market. In the example above the market is for data integration tools.
Obviously as a startup you probably won’t be in the to right quadrant of leaders – where you will probably be is the top left quadrant of challengers. Here’s how Gartner describes the four types of competitors.
Leaders execute well against their current vision and are well positioned for tomorrow.
Visionaries understand where the market is going or have a vision for changing market rules, but do not yet execute well.
Niche Players focus successfully on a small segment, or are unfocused and do not out-innovate or outperform others.
Challengers execute well today or may dominate a large segment, but do not demonstrate an understanding of market direction.
Every investor pitch needs to include competition but in all the presentations I’ve seen recently no one has used the Magic Quadrant. In fact, competitive analysis tends to be weak in many startups and that’s as it should be. You want to focus on your customer, their problem, and your highly differentiated way to solve their problem. But for investors that’s necessary, but not sufficient. They need to see how you stack up against the competition. But I’m not a fan of the standard checkbox diagram. Mucker Capital even devotes an entire blog post to why they hate these checkbox slides!
When you are ready to go after funding and putting together your pitch deck I recommend you learn about the Magic Quadrant. Gartner does an excellent job of explaining how you can use their tool. And you can use Google to search for magic existing magic quadrants by market. For example, here’s the Magic Quadrant for business intelligence platforms. However, keep in mind that Gartner is focused on the enterprise. If you are in a B2C market you may not find an example to help you.
The Magic Quadrant is a good example of how to use visuals – in this case the standard
2 x 2 diagram – in your investor presentation. Visuals should provide both context and perspective.