Startups are not defensible(afathalla.com)
afathalla.com
Startups are not defensible
http://afathalla.com/posts/Startups_Are_Not_Defensible/
7 comments
I guess building it first protects for a while until you start getting attention.
dear Ahmed your definitely right...One cant protect his idea or start up business, one has to update and enhance his product-service constantly and add new features to extend it's life cycle....But I believe there is a way to preserve your ideas and products or services which is your target consumer/customer loyalty to your brand which will make it hard for them to switch from one product to another. Example Iphone users and Samsung users..similar products one may have more features but it's brand loyalty that makes an apple loyal consumer switch from Iphone 5 to 5's not to Samsung. the key is BRAND IDENTITY =D
Mobile OS's also get user lock-in due to 1) people being familiar with how a particular OS works and 2) people not wanting to start over with apps.
Asking about a source of competitive advantage is completely natural and justified. Exactly due to the copycats risk. And yes, you're right. The solution is to keep making things better for chosen customer segment. And for them "better" can mean cheaper, faster, easier, more beautiful, prestigious etc.
Better and Faster sure. Cheaper is substitute if you can't do the first two and will likely fail.
This is so true, Ahmed. I've been highly irritated by this question for a long time. There is always more to it (see other comments - branding, market expertise, 'better' product, blah blah) but at the end of the day, anyone can innovate.
False. Startups may start out in an indefensible state, however, investors will expect you to build some kind of defences somewhere along the way. If it is impossible for your start-up to build such defences, you will become commoditised rather quickly, and therefore may not be a good investment, however good a project it might be in the first instance.
Building barriers to entry is a fundamental activity of the start-up that wants to succeed in the long term. Examples of barriers to entry includes: network effects, customer lock-in, stock, relationships with partners… those are not necessary, and indeed often impossible, at the beginning of the life of the startup. However, if they cannot be engineered at some point later, the business is indefensible and therefore potentially a bad investment.
Successful businesses like Google, Facebook, or Apple, or Microsoft, may still be disrupted. However, because of the barriers to entry in their markets, these disruptions will happen over a period of years or decades, rather than over a month. That is one of the factors that makes them great investments.
When investors ask about barriers to entry, they are not asking what barriers to entry you have right now. Rather, they are asking what barriers to entry you will be able to build over the next few years, should you happen to be successful. And you better have an answer for that if you want their money.
Building barriers to entry is a fundamental activity of the start-up that wants to succeed in the long term. Examples of barriers to entry includes: network effects, customer lock-in, stock, relationships with partners… those are not necessary, and indeed often impossible, at the beginning of the life of the startup. However, if they cannot be engineered at some point later, the business is indefensible and therefore potentially a bad investment.
Successful businesses like Google, Facebook, or Apple, or Microsoft, may still be disrupted. However, because of the barriers to entry in their markets, these disruptions will happen over a period of years or decades, rather than over a month. That is one of the factors that makes them great investments.
When investors ask about barriers to entry, they are not asking what barriers to entry you have right now. Rather, they are asking what barriers to entry you will be able to build over the next few years, should you happen to be successful. And you better have an answer for that if you want their money.