VCs want you to play a difficult game
They are looking for the competitive advantage, not for the product you are making
In my previous article, I discussed the Laws of Choosing Marketing Channels.
To achieve quick wins, focus on selecting easy paths. Look for the hacks that are quick, easy, and cheap.
For example, running ads on Instagram to get some business is a good short-term strategy. Calling your friends and old colleagues to sell your service can help you lock a few deals.
However, when you consult with investors, they suggest that you should not choose something easy. That easy and inexpensive way is easy to copy. They want you to focus on building something no one else can do.
That is called long-term planning, which helps you create a moat. Let me give you some examples:
Amazon has built a massive supply chain system that is very hard to beat. And it took them years to build.
Tesla has made a vast network of superchargers that is very hard to compete with.
Marques Brownlee has built an enormous fan base. This can help him test and sell any product he wants, and he will be miles ahead of any other startup today
A network effect like iMessage is also a famous example. This is a moat for Apple
Building such things is always challenging. It requires a lot of time, consistency, and patience. Often, a substantial amount of money. That is why not everyone is ready for it.
There are many strategies that you can adopt to build a moat. And if you want to win, you really need a moat, as this will give you a competitive advantage. Let’s see a few of them.
How good is your service?
If you are in a services business, you want to be the best at it so no one else can replace you. That requires thousands of hours of practice and extensive work experience. You can master a skill, for example, data analysis in market research. You can become the best at it by doing it thousands of times, by repeating and making mistakes as many times as possible. An easy example is the Lawyers. Not every lawyer makes the same amount of money. Some lawyers make a ton of money due to their exceptional skills.
Your personal brand can become another moat.
Whether you are selling a product or a service, your personal brand will help you sell faster. People will trust you and would like to buy from you. It will be harder for any startup to compete with your personal brand, unless they have one too. People like Elon Musk, Kim Kardashian, and Richard Branson don’t need an introduction when they launch a new business.
Money can help you build a moat.
In many cases, if you can stay in the business for a longer period of time, your competitor will die if they don’t have enough money. The more oxygen you have, the longer you can stay in the water.
Money can also help you build the systems and infrastructures that can help you create an unshakable competitive advantage.
Build a team
Instead of outsourcing everything, you want to build a team of experts who can deliver better quality faster than your competitors. Your team can develop the tools and systems that many of your competitors will likely borrow from external sources initially. Your competitor wants to license every software; instead, you can be building something that is precisely what’s needed for your industry.
Build an exclusive access
We tried this in one of the startups I am working on. Our first and foremost priority was to sign our customers and bind them with us for as long as possible. We had to lose so much in return, but this move gave us a competitive advantage. Now, it is very challenging for new startups to surpass us.
Play by different rules
At the end of the day, you want to see how you can play by different rules. If everyone is cold-messaging on LinkedIn, you want to learn how to reach out using a different channel.
I am clearly hearing this from some VCs. Building and launching a new product is easier than ever, particularly with the same level of access to data and technology. The only thing that will help you win is your moat.
Very true analysis