Stop Struggling With Differentiation

Companies under $15 million ARR constantly struggle with differentiation. I see this issue repeatedly. They aren't clear on how they're different or why they are better (focus on being different, not better), and they struggle immensely to position themselves effectively. In the crowded SaaS marketplace, differentiation becomes critical, especially when you lack significant brand exposure or market awareness. Without it, you're fighting an uphill battle, making it challenging to close deals and set yourself apart from competitors.

Why is differentiation critical? First, your market messaging suffers without clear differentiation because your team isn't aligned around a clear, compelling POV. Second, it becomes nearly impossible to cut through market noise. You lack a unique insight—a secret others haven't discovered or don't believe. Successful companies are built on these unique insights that can't easily be copied. Third, your sales team struggles because you don't have a clear differentiation or a strong point of view. They have a pipeline but face a massive drop in conversion rates because they can't effectively articulate why your solution is better.

For example, I'm currently working with a SaaS company with an ARR of around $4 million. They have decent pipeline coverage and conversion rates, yet they experience an alarming drop—from the opportunity to closed-won, the conversion rate plummets to around 11%. This sharp decline happens because they lack tangible differentiation, a clear point of view, and effective sales enablement. PS: please don't make your differentiation be "easue of use" - I see that too often!

Here's how most try to solve the problem: Most companies never tackle this issue seriously. It sounds contrarian, but they're so caught up in daily operations that they rarely focus on defining their differentiation. Solving this internally becomes impossible because of too many opinions, a lack of effort in solving the issue, and no alignment to create agreements. Some try to solve this by hiring positioning or messaging consultants, which is how people approach the challenge.

Here's why that doesn't work: Despite investing in these external consultants, companies typically end up with complicated 40-50-page slide decks filled with positioning frameworks and numerous messaging options. Yet, CEOs and boards still struggle to understand their differentiation clearly. Internally, there's rarely alignment; everyone holds their viewpoint based on their function. Customer success, sales, marketing—each team sees the differentiation differently. Unless the CEO succinctly communicates a unified message, you get chaos. The sales team then improvises their versions of differentiation to close deals, leading to inconsistent, fragmented messaging.

Here's how I would solve it instead:

Step 1: Identify your ingredients for differentiation.

1. Product Differentiation

• Feature Superiority – A must-have feature others don't offer (e.g., Notion's block-based editing).

• Workflow Innovation – A more intuitive, streamlined, or faster way to get things done (e.g., Linear's issue tracking).

• AI/Automation – A proprietary AI-powered workflow or decision-making capability.

• Speed & Performance – Faster execution compared to alternatives.

• Ecosystem Integrations – Deep, native integrations with mission-critical tools.

2. Market Positioning Differentiation

• Serving a Specific Niche – Dominating an underserved segment (e.g., ConvertKit for creators vs. Mailchimp for everyone).

• Industry-Specific SaaS – Purpose-built for a vertical (e.g., Clio for legal firms).

• Regulatory & Compliance Focus – Security, privacy, or compliance as a key value driver (e.g., Vanta for SOC 2 compliance).

• SMB vs. Enterprise – Tailoring the product and pricing for a specific company size.

3. Business Model Differentiation

• Pricing Strategy – Usage-based, per-seat, freemium, flat-rate, or hybrid pricing models.

• Customer Success & Support – White-glove onboarding, proactive support, or premium consulting services.

• Self-Serve vs. Sales-Led – Removing sales friction through self-serve onboarding.

4. Go-To-Market Differentiation

• Community-Led Growth – Building a movement around the product (e.g., Webflow, Figma).

• Product-Led Growth (PLG) – A seamless free-to-paid conversion (e.g., Slack, Calendly).

• Sales-Led Growth – A structured outbound motion that others don't use effectively.

• Content & Thought Leadership – Owning a category through content marketing.

• Channel & Partner Strategy – Leveraging partnerships, affiliates, or resellers.

5. Brand & Messaging Differentiation

• Unique Point of View – Challenging the status quo with a clear stance (e.g., "No-code will replace developers").

• Storytelling & Narrative – Compellingly framing the problem and solution.

• Memorable Branding – A distinct voice, identity, or market presence.

6. Data & Network Effects

• Proprietary Data – Insights competitors don't have (e.g., Gong's sales conversation intelligence).

• User-Generated Content – A network of contributors (e.g., Notion templates, Webflow showcase).

• • Marketplace or Ecosystem – A thriving ecosystem around your platform (e.g., Zapier's integrations).

Step 2: Distill your differentiation into one clear, practical sentence. Take inspiration from successful examples:

• Uber's early positioning was: "You push a button, and in five minutes, a Mercedes picks you up and takes you where you want to go."
• Facebook's early positioning: "Type someone's name and find out a bunch of information about them."

This format—"You do X, and Y happens"—clearly captures your differentiation.

Step 3: Keep your execution simple. If you're under $5 million ARR, skip the extensive positioning decks. Instead, create clear, actionable messaging anchored in your unique insight. Ensure your entire team consistently communicates and thoroughly understands this messaging, especially sales.

Action action action:

Investors, this week's tangible prompt:

Encourage your portfolio companies under $10 million ARR to prioritize differentiation. Instead of spending months and thousands of dollars on complex positioning exercises, push them to dedicate a week or two to clarify and test their unique differentiation. Ask them:

• Are you clear on your unique insight or secret?
• Have you distilled your differentiation into a concise statement?
• Have you tested this messaging with customers to see how it resonates?

CEOs, your tangible prompt:

If you already know your differentiation, summarize it clearly on a single slide and ensure everyone internally is aligned around it.

You can use this structure:

• Use Case
• Competitive Alternative
• Problem
• Product Category
• Differentiation Summary
• Differentiated POV
• Unique insight or secret (to reframe the buyer's psychology)

If you're unclear or fuzzy, dedicate focused internal time or seek external support—but keep it simple. Work directly with customers (ask "WHY US," "WHY NOW," etc.), and don't get too obsessed with strategic narrative, convoluted stories, or worrying about it being "right." Keep it as simple as you can and rapidly iterate to clarity. Avoid complicated decks.

Here's the bottom line: Getting your differentiation right isn't just nice to do—it's essential. It sharpens your messaging, aligns your teams, and dramatically improves your ability to close deals. Don't overthink it—clarify, simplify, and execute. Your market will reward you, your teams will thank you, and your results will speak for themselves.

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