What makes a startup defensible?
A network effect is when another user makes the service more valuable for every other user. Once your company gets ahead, users won’t find as much value in your competitors’ smaller networks. Each of these makes your business hard to catch once it gets going. They make it defensible.
What are moats in business?
A company’s moat refers to its ability to maintain the competitive advantages that are expected to help it fend off competition and maintain profitability into the future.
What is defensibility in the marketplace?
Think about defensibility in terms of both sides on your marketplace, supply and demand. Defensible marketplaces benefit from powerful network effects and create an emotional connection with their customers. Don’t neglect your supply: without supply, you don’t have a service or product.
What is a defensible moat for a company?
By establishing a defensible competitive advantage a company can fashion a wide enough economic moat that effectively curbs competition within their industry. Essentially, the wider the economic moat, the larger and more sustainable the competitive advantage of a firm.
What is product defensibility?
If you are building a product, it is important to have a conceptual framework (or mental model) to think about it. A product that wins in the market segment or the category of the market segment and then becomes hard to replace by any other competing product is a defensible product.
What is defensibility?
Noun. 1. defensibility – capability of being defended; “they built their castles with an eye to their defensibility”; “client complaints create a felt need for the defensibility of individual actions”
What are the 5 moats?
There are five kinds of moats: brand, secret, toll or toll bridge, switching, and price.
What is an example of a moat?
Common economic moats include patents, brand identity, technology, buying power and operational efficiency.
How do you build defensibility?
There are six steps to building a defensible product….
- Choose a small and growing market.
- Build a hook to pull the users.
- Provide instant gratification.
- Have a single user utility.
- Grow to multiple user utilities.
What is a defensible business?
Defensibility emerges from differentiation. A strong differentiator is something in the company’s product/service offering that cannot be easily replicated or eclipsed by a competing company. Let’s have a look at the key differentiators and examples of companies that built them to be defensible.
Is it defensible or defendable?
As adjectives the difference between defendable and defensible. is that defendable is capable of being defended while defensible is (of an installation etc) capable of being defended against armed attack.
Which is the best way to create defensibility?
In the old days, the business literature listed many ways to create defensibility: unique access to raw materials, favorable geographic location, government regulations like tariffs, patents and licenses, etc. Network effects have emerged as the native defense in the digital world.
How does defensibility affect the value of a business?
If you build a business with good competitive advantages, your value grows linearly as you grow revenues. That’s good. But if you’re able to move past competitive advantages to true defensibility — to really being able to protect your business from competition — your value grows exponentially. In the digital world, there are few defensibilities.
Why is it important for startups to have defensibility?
Like we’ve seen with Uber, Square or NextDoor, the ability for a team to raise more capital lets a company hire faster, buy market share and move to set up real defensibilities. Further, raising a lot of capital helps scare other investors from investing in your competition.
Why is it important to have line of sight to defensibility?
So having a line of sight to defensibility matters, even for early-stage investing. In the old days, the business literature listed many ways to create defensibility: unique access to raw materials, favorable geographic location, government regulations like tariffs, patents and licenses, etc.