It’s possible to identify the key players that overlap with a company’s business model with a competitor analysis. This overlapping can be analyzed in terms of key customers, technologies, distribution, and financial models. When all those elements are analyzed, it is possible to map all the facets of competition for a tech business model to understand better where a business stands in the marketplace and its possible future developments.
VTDF Framework
Description
Analysis
Implications
Applications
Examples
1. Current Customer Overlap (C)
Analyze the key customers that are currently receiving value from the competitors and sustaining their businesses.
– Identify the target customer segments of each competitor. – Determine the customer base that is being served and the value they derive. – Assess the size, loyalty, and needs of these customer segments.
– Helps in understanding the competitive landscape and the market segments served by each competitor. – Identifies the customer base that competitors rely on for revenue and growth.
– Identifying and comparing customer segments served by multiple tech companies. – Assessing the customer loyalty and satisfaction levels with competitors.
Customer Overlap Analysis Example: Evaluating the customer base of two SaaS companies operating in the same industry.
2. Current Technology Overlap (T)
Examine the key technological advantages that sustain the value propositions of competing tech companies.
– Identify the core technologies, innovations, or proprietary solutions used by competitors. – Assess the technological capabilities, patents, or unique features that provide a competitive edge. – Evaluate the scalability and adaptability of the technology stack.
– Provides insights into the technological strengths and weaknesses of each competitor. – Helps in assessing the barriers to entry and differentiation in the market.
– Comparing the technological innovations and patents held by different tech firms. – Assessing the scalability and future potential of technology used by competitors.
Technology Overlap Analysis Example: Analyzing the unique technology stack and innovations of competing AI startups.
3. Current Distribution Overlap (D)
Investigate the key distribution channels employed by competitors to enhance the utilization of their technology.
– Identify the primary distribution channels and strategies used by each competitor. – Assess the reach, effectiveness, and partnerships associated with these distribution channels. – Analyze how distribution complements the technology and value proposition.
– Understanding how competitors reach and engage with their target audience. – Helps in identifying potential collaboration opportunities or areas where competitors have a competitive advantage in distribution.
– Evaluating the distribution strategies of competing tech companies in reaching customers. – Assessing the effectiveness of partnerships in expanding market reach.
Distribution Overlap Analysis Example: Examining the distribution channels and partnerships of competing e-commerce platforms.
4. Current Financial Model Overlap (F)
Explore how competitors finance their growth, whether through equity, debt, financing, or bootstrapping.
– Analyze the financial models employed by competitors, including funding sources and capital structure. – Assess whether competitors rely on equity funding, venture capital, loans, or self-funding. – Evaluate the financial sustainability and growth potential of each model.
– Provides insights into the financial strategies and sustainability of competing businesses. – Helps in understanding the risk exposure and long-term viability of different financial models.
– Comparing the financial models and funding sources used by tech startups in the same industry. – Assessing the scalability and profitability of various financial approaches.
Financial Model Overlap Analysis Example: Analyzing how competing software companies secure funding and sustain their growth.
5. Future Technology Development (FTD)
Investigate the technologies that competitors are actively developing to potentially create new markets.
– Identify ongoing research, development, and innovation efforts of each competitor. – Assess the potential impact of future technologies on market expansion and disruption. – Analyze the scalability and market readiness of upcoming technological advancements.
– Helps in forecasting the competitive landscape and potential market shifts. – Provides insights into competitors’ strategies for innovation and market expansion.
– Assessing the R&D initiatives and pipeline technologies of competing tech firms. – Evaluating the market potential of future technologies under development by competitors.
Future Technology Development Example: Analyzing the impact of AI advancements under development by competing tech giants on future markets.
Why competition in the business tech world looks slightly different
There are several ways to look at competition. However, in a digital world, the concept itself (for now) has become more fluid. Indeed, when you look at companies like Amazon, Tesla or perhaps Google, where would you start?
True, each of those companies has a main market/industry (Tesla = electric cars, Amazon = e-commerce, Google = search), and yet when we have a closer look at what those companies do we realize there is more to it.
Indeed, as those companies operate at the edge of business and technological innovation, often times they place bets on new markets and industires that if prove to develop, can become whole new industries.
So where do we start?
Understanding competition in the business tech world
A tech business model is made of four main components: value model (value propositions, mission, vision), technological model (R&D management), distribution model (sales and marketingorganizational structure), and financial model (revenue modeling, cost structure, profitability and cash generation/management). Those elements coming together can serve as the basis to build a solid tech business model.
In the VTDF framework, I broke down tech companies business models in four main parts:
Value.
Technology.
Distribution
And Financial model.
Each of those parts is essential to build a viable long-term tech business model.
Thus, we can leverage on this same model to also analyze competition in the business tech world.
Breaking down competition in the business tech world
When it comes to competition in the business tech world, we’ll analyze it from a few perspectives:
Current Customer Overlap: who are the key customers that are currently getting value and sustaining the business?
Current Technology Overlap: what is the key technological advantage that sustains the value proposition of the business?
Current Distribution Overlap: what is the key distribution channel the company is using to enhance the use of the technology that enhances the value proposition?
Current Financial Model Overlap: is the company using equity/capital, debt/financing to grow or perhaps is it bootstrapping?
Once looked at the four components above, we can look at a fifth one:
Future Technology Development: what technologies is the company developing that can help develop a whole new market?
Let’s see each of those elements in details.
Current Customer Overlap
Who are the key customers that are currently getting value and sustaining the business?
Current Technology Overlap
What is the key technological advantage that sustains the value proposition of the business?
Current Distribution Overlap
What is the key distribution channel the company is using to enhance the use of the technology that enhances the value proposition?
Current Financial Model Overlap
Is the company using equity/capital, debt/financing to grow or perhaps is it bootstrapping?
Future Technology Development
What technologies is the company developing that can help develop a whole new market?
Case Study: Tesla Competitive Analysis
As an electric automaker and builder of sports cars and now trucks, Tesla’s competitors comprise companies like Ford, Mercedes-Benz, Porsche, Lamborghini, Audi, Rivian Lucid Motors, Toyota, and more. At the same time, Tesla is an electric energy production and storage company (SolarCity); it competes with Sunrun, SunPower, and Vivint Solar. And as an autonomous driving company, it competes with companies like Zoox, Waymo, and Baidu with the self-driving software.
Tesla isn’t just an automaker. Its business model spans across the electric-only car industry (a once blue ocean market that Tesla helped open up).
Tesla is also an electric generation and storage company, with SolarCity’s acquisition, which is an essential element of the Tesla business model’s future success. It is enabling the ecosystem that will make Tesla sustainable as a company in the long-term.
In addition, Tesla is also investing on autonomous driving player. For that, we’ll have to analyze Tesla from these three perspectives.
Automaking
Within the automaking segment, Tesla has over the years diversified its products‘ lines, to cover different segments of the market. When Tesla entered the market, as a go-to-market strategy it had to enter it (nonetheless Elon Musk’s long-term vision to make the electric car available to the masses) with the Roadster model.
Sport & Performance
The primary models covering this segments are:
Roadster: here some of the competitors are Dodge Challenger, Porsche Chiron, and Bugatti
Model S: in this segment, Tesla competes with players like Mercedes S-Class, BMW 7 Series, Porsche Panamera, Audi A7 & A8 and more.
Suv
The primary models covering this segments are:
Model X: here some of the competitors are BMW X5, Mercedes-Benz GLS-Class, Volvo XC90, Porsche Cayenne.
Model Y (compact SUV): in this segment, Tesla competes with Renault Zoe, Nissan LEAF, Volksvagen e-Golf, Audi e-tron and more.
Truck
In this segment, Tesla just launched the Cybertruck:
Tesla has finally its mass-market product, the Model 3. This model competes with models such as BMW Series 2,3,4,5 Mercedes Class C, CLA, CLS, Audi A3, A4, A5, Lexus, ES, GS, and many others.
Energy Generation & Storage
Tesla acquired SolarCity back in 2016, for $2.6 billion, and with that, it competes in the electric production and storage industry with players like SunRun, SunPower, Vivint Sonar, Trinity Solar, and SolarWorld to mention a few.
Autonomous driving
Tesla’s Autopilot is one of the key ingredients of its technology and one of the most interesting future developments for the company. In this segment, Tesla competes with other autonomous driving companies like Zoox (bought by Amazon), Waymo (an Alphabet bet), and Baidu.
Key Highlights
Competitor Analysis Importance: Competitor analysis is a critical process for tech companies to gain a comprehensive understanding of their competitive landscape. By identifying and studying key players operating in the same business domain, companies can make informed strategic decisions. This involves delving into various aspects of the competition, such as:
Customers: Understanding who the competitors’ target customers are, what their needs and preferences are, and how well they are served.Technologies: Analyzing the technologies competitors use to develop their products or services, and comparing them to the company’s own technological capabilities.Distribution Channels: Examining the various channels competitors use to distribute their offerings, including online platforms, retail stores, partnerships, etc.Financial Models: Studying competitors’ financial structures, revenue streams, pricing strategies, and cost management approaches to identify potential areas of improvement.
By conducting a thorough competitor analysis, tech companies can identify gaps in the market, areas for innovation, and strategies to differentiate themselves from competitors.
Tech Business Model Components:The tech business model is made up of four essential components that collectively define how a tech company operates and creates value:
Value Model: This component outlines the company’s value propositions, which are the unique benefits or solutions it offers to customers. It also includes the company’s mission and vision, which provide a sense of purpose and direction.
Technological Model: Here, the focus is on managing research and development activities. This involves allocating resources to innovate and improve existing technologies or develop new ones, ensuring the company remains competitive and aligned with market trends.
Distribution Model: This component involves structuring the company’s sales and marketing operations. It includes determining the target audience, selecting distribution channels, and designing strategies to effectively reach and engage customers.
Financial Model: The financial model encompasses revenue modeling, cost structures, profitability analysis, and management of cash flow. It’s crucial for ensuring the company’s financial sustainability and growth.
Perspectives on Competition:Several perspectives aid in analyzing competition in the tech business landscape:
Current Customer Overlap: Identifying key customers shared with competitors helps prioritize efforts to retain and satisfy these important clients.
Current Technology Overlap: Assessing technological advantages helps understand the unique selling points and innovation potential compared to competitors.
Current Distribution Overlap: By examining distribution channels, a company can determine which channels effectively enhance the value proposition and expand reach.
Current Financial Model Overlap: Analyzing competitors’ financial models aids in refining the company’s financial strategies and approaches for growth.
Future Technology Development: Exploring emerging technologies provides insights into potential areas for expansion into new markets or industries.
Case Study: Tesla Competitive Analysis:Tesla serves as a case study to illustrate the concepts discussed. Tesla is not solely an automaker; it also engages in electric energy production and storage (SolarCity) as well as autonomous driving technology. The case study focuses on Tesla’s competition across different segments, including:
Automaking: Analyzing how Tesla competes with other automakers in the electric vehicle market.
Sport/Performance: Understanding Tesla’s competitive stance in the high-performance vehicle sector.
SUVs: Examining Tesla’s competition in the SUV market segment.
Trucks: Analyzing how Tesla’s electric trucks compete in the commercial vehicle industry.
Zoominfo is an American software-as-a-service (SaaS) company founded by Henry Schuck and Kirk Brown in 2007. The company sells access to the most comprehensive B2B database in the world to help sales and marketing teams better communicate with prospects. Zoominfo held an IPO in June 2020 raising $935 million. Like similar software companies that are valuable to remote teams, demand for the Zoominfo platform increased because of the coronavirus pandemic. It is now used by over 20,000 businesses, with clients including T-Mobile, Zoom, Amazon, and Google.
Spotify is the world’s largest music streaming platform with over 381 million users across 184 markets around the world. The company was founded by Martin Lorentzon and Daniel Ek in 2008 in response to the shutdown of peer-to-peer music service Napster. Spotify became a success because it was the first company to determine how to distribute music legally and compensate the music industry at the same time. The platform now offers various curated music discovery services, music stations, audio customization, and private listening. In recent times, it has also ventured into the streaming of audiobooks, podcasts, comedy, poetry, and short stories.
Poshmark is a social commerce marketplace where users can buy and sell new or used clothing. The company was founded in 2011 by Manish Chandra, Tracy Sun, Gautam Golwala, and Chetan Pungaliya. Poshmark is one of many companies looking to profit from the explosive growth in the second-hand clothing and resale industry, which is expected to be worth around $51 billion by 2023. Scores of women, in particular, are opting to sell their unwanted fashion items online instead of donating them to charity or thrift stores.
Afterpay is an Australian fintech company operating in Australia, Canada, the United Kingdom, New Zealand, and the United States. Founded in 2014 by Nick Molnar and Anthony Eisen, the company enjoyed a first-mover advantage in the buy-now-pay-later (BNPL) space. Less than seven years later, the company reached 13.1 million active customers with gross sales amounting to $10.1 billion. Despite its success, some suggest the company has lost its edge in the buy-now-pay-later space with the emergence of several high-profile competitors exerting their influence and giving merchants more choice.
Carvana is an online used car retailer with vending machines located around the United States. The company was founded in 2012 by Ryan Keeton, Ben Huston, and Ernest Garcia III. The company is the fastest growing online used car retailer in North America and was recently one of the youngest companies to be added to the Fortune 500 list. While Carvana is currently the only American company selling cars in vending machines, its growth and success have not gone unnoticed by other players. In this article, we’ll take a look at some of the company’s major competitors.
GoodRx is an American healthcare company known for its telemedicine platform and a website and mobile app that track prescription drug prices. As part of this service, the company makes drug coupons available for free to consumers. GoodRx was created by Trevor Bezdek, Doug Hirsch, and Scott Marlette. Hirsch, an early employee at both Yahoo and Facebook, got the idea for the company after picking up a prescription with private health insurance and still having to pay $450. Given the high variability in prices between different pharmacies, Hirsh went on a mission to make prescription drug prices more transparent and affordable for ordinary Americans. Revenue in the second quarter of 2021 amounted to $177 million with over 7.5 million app customers using the GoodRx app. While the company was the first to provide a comprehensive list of pharmacy drug prices, new players have entered the market. The rest of this article will be devoted to looking at the main GoodRx competitors.
DoorDash is an online food ordering and delivery platform founded by Tony Xu, Stanley Tang, Andy Fang, and Evan Moore in 2013. Together with its subsidiaries, DoorDash has a 56% market share in food delivery and a further 60% in the convenience delivery sector.
In 1965, PepsiCo acquired Frito-Lay in what the chairmen of both companies called a “marriage made in heaven”. The resultant company transformed PepsiCo from a soft drink organization and set it on a path to becoming one of the world’s leading food and beverage companies. Today, PepsiCo claims to operate in more than 200 countries and territories around the world with seven distinct divisions and many successful brands.
The Coca-Cola Company has 21 different billion-dollar brands or brands that generate more than $1 billion or more in revenue each year. The company also sells its products in nearly every country in the world, with Cuba and North Korea the only two countries where it is not sold officially. What’s more, the Coca-Cola brand is worth $87.6 billion, making it one of the most valuable among all companies. Though these figures allow Coca-Cola to enjoy market dominance in many countries, the company is nevertheless subject to intense competition.
Headquartered in Burbank, California, Disney has global reach and influence with its universally popular resorts, movies, streaming services, video games, and merchandise. But as one of the largest media conglomerates in the world with a diverse range of products in multiple marketplaces, Disney is no stranger to competition.
International Business Machines Corporation (IBM) is an American multinational technology company. It was founded in New York as the Computing-Tabulating-Recording Company in 1911 by Charles Ranlett Flint. IBM is a diverse company with a similarly diverse portfolio of products and services. It produces and sells hardware, middleware, and software. It also offers hosting and consultancy services in nanotechnology and mainframe computers. What’s more, IBM has a strong culture in research and development, filing the most U.S. patents of any business for the past 28 years.
Starbucks is a multinational coffee chain headquartered in Seattle, Washington. It was founded by Jerry Baldwin, Zev Siegl, and Gordon Bowker in 1971. From a single and very humble bean roasting store in Pike Place Market, the company is now a global giant operating almost 33,000 stores around the world. This large global footprint obviously increases the competition for Starbucks in many different markets. The coffee industry itself is also highly competitive, with established players including McDonald’s and Dunkin’ Donuts.
Boeing is best known for designing and manufacturing commercial aircraft, but the company also produces helicopters, rockets, satellites, spacecraft, missiles, and telecommunications infrastructure. Founded in 1916 by William Boeing in Seattle, Washington, the company is one of the largest aerospace manufacturers and defense contractors in the world.
While Google (now Alphabet) has been born as a search engine, it is now a diversified company, even though its core business remains search, as most of its revenues still come from Google, the search engine, and YouTube, the “video engine.” However, as a tech giant, which business is primarily based on advertising, the company does compete with Facebook, Twitter, Microsoft (with Bing), and Amazon (with e-commerce search and its advertising machine).
Peloton is a media and exercise equipment company primarily making money making money via its fitness products. The idea for the company came from John Foley, who argued that technology could help time-poor individuals get a full workout at home. The company competes with other players like Bowflex, NordicTrack, Life Fitness, MYX Fitness.
IKEA was founded in 1943 by Swedish businessman Ingvar Kamprad as a mail-order catalog business. The company is best known for selling affordable flat-pack furniture, but it also sells home accessories and kitchen appliances. Today, IKEA offers approximately 9,500 products across 445 stores in 52 countries. With such broad reach, IKEA is not immune to competition.
The Airbnb story began in 2008 when two friends shared their accommodation with three travelers looking for a place to stay. Just over a decade later, it is estimated that the company now accounts for over 20% of the vacation rental industry. As a travel platform, Airbnb competes with other brands like Booking.com, VRBO, FlipKey, and given its massive amount of traffic from Google. Also, platforms like Google Travel can be considered potential competitors able to cannibalize part of Airbnb’s market.
Salesforce is a cloud-based customer relationship management (CRM) provider, allowing businesses to build meaningful and sustained relationships with their customers. With robust, customizable software that integrates with social media, Gmail, and Microsoft Outlook, the Salesforce CRM platform is rated highly among businesses of all shapes and sizes. Recent data has shown that the company has captured 19.5% of the global CRM market.
In just fifteen short years, Shopify has grown from humble beginnings to become one of the fastest-growing eCommerce platforms online. The Shopify eCommerce solution is perhaps best suited to users who desire an easy, flexible and affordable starter solution for their online store. The provider now has upwards of 820,000 stores accounting for 20% of the total market share. However, the continued success of any company in the dynamic digital market is never guaranteed.
Netflix is the largest streaming video subscription service in the world. Created by Reed Hastings and Marc Randolph in 1997, the company has revolutionized the video content subscription model with over 139 million subscribers in 190 countries. The success of Netflix is due to two factors. The first is a recommendation system that gives suggestions on what customers should watch based on their viewing history. The second is the vast catalog of content on offer – produced by third parties and by Netflix itself. These factors have resulted in Netflix competing against influential TV networks and film producers for viewership.
YouTube is the most popular online video platform, a hybrid between a video search engine and a social media platform with a continuous feed prompted by social interactions and engagement. In fact, the platform is so popular that YouTube.com is the second most visited website on the internet. After being acquired by Google in 2006 for $1.65 billion, the platform now boasts over 2 billion registered users. Collectively, these users upload 500 hours of video every minute. The platform competes with other video engines like Vimeo, Dailymotion, and social platforms like IGTV, TikTok, and Twitch.
Zoom is a video platform, which enabled remote working. As such it competes with other large tech players like Google and Microsoft for the productivity space, and other startups like Slack and Go-To-Meetings.
As an electric automaker and builder of sports cars and now trucks, Tesla’s competitors comprise companies like Ford, Mercedes-Benz, Porsche, Lamborghini, Audi, Rivian Lucid Motors, Toyota, and more. At the same time, Tesla is an electric energy production and storage company (SolarCity); it competes with Sunrun, SunPower, and Vivint Solar. And as an autonomous driving company, it competes with companies like Zoox, Waymo, and Baidu with the self-driving software.
Amazon is a consumer e-commerce platform with a diversified business model spanning across e-commerce, cloud, advertising, streaming, and more. Over the years, Amazon acquired several companies. As it operates across several industries, Amazon has a wide range of competitors across each of those industries. For instance, Amazon E-commerce competes with Shopify, Wix, Google, Etsy, eBay, BigCommerce.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
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