Competitors come in four types: (1) Direct — same product, same market (e.g., another 3D ultrasound maker), (2) Indirect — different product, same problem (e.g., MRI as alternative diagnostic), (3) Potential — could enter your market (e.g., big tech companies), (4) Substitute — entirely different approach (e.g., blood tests replacing imaging).
Saying "we have no competitors" is the biggest red flag for investors. Every problem has a current solution — even if it's doing nothing.
Key Takeaways
- Four types: Direct, Indirect, Potential, Substitute.
- Never say "no competitors" — the status quo IS a competitor.
- Potential competitors (big tech) are often the biggest threat.
- Understanding all four types prevents blind spots.