- No matter how awesome you think your product is going to be, it's likely you're going to have competitors. Remember, you might be disrupting an existing market that has bunches of competitors and you're trying to do something different against them. Or you're coming into a market that, maybe you don't think exists, but there will be competitors at some point. As you're thinking about both your product and your market, make sure you think about barriers to entry for others. So you should assume that, if you're going into a market with existing companies that you're going to be competitors with, well, they've got resources too, especially if they're much bigger companies than you.
And so, their ability to do things to start to compete back with you when you're starting to disrupt them is significant. If you're entering a market that you feel like is a new market, doesn't have somebody in it already that you're a natural competitor with, if that's an attractive market, you should assume that other companies are going to start going after the market when they see that you're having some success with it, so establishing barriers of entry early are really important. Now, these barriers of entry can be structural in the context of your product. So they're things that cause it to be very hard for somebody to switch from your product to another product.
Or it can be things that disincent people to switch from your product to some other product because of additional benefits that your product gives the customer, the more they use your product. They could also be functional capabilities of your product that are extremely hard to duplicate, and as a result of them being extremely hard to duplicate, even though somebody might start to compete with you, all of a sudden they run up against a wall in terms of that extra part of your product that's going to be very, very difficult for them to recreate.
The other part of barriers of entry have nothing to do with the product itself, but the market dynamic of how you go to market and how you deal with and engage with your customers. It could be the distribution channels that you use. You might be able to set up distribution channels where you have some exclusivity, whether it's exclusivity through a particular selling channel, like a retail store, whether it's through the dominance, presence of your product in a particular category.
You can also set up situations where it's just very difficult for somebody else to find your competitor, relative to the type of product and the way your product's positioned. So thinking through all of these different approaches, whether they're product-centric or market-centric, in the context of creating barriers to your competitors, is very important to build in at the beginning, rather than at the end, when there's nine companies in the market that you're going after. And by the way, if you're a company that's showing up and there's already nine other companies that are doing something that's very similar to you, and you're not meaningfully better than those other nine companies, 10 times better, you're probably going to run into their barriers of entry very quickly.
So it's going to be hard for people to see your product in all the noise that's going on, or break through the market dynamics of choosing your product versus somebody else's product. So in some ways, studying what's going on in that landscape and thinking about what barriers to entry you're going to run into can help you start to define and establish barriers to entry for other people who are coming after your product in the future.
- Define “shiny object syndrome.”
- Identify your customer’s pain.
- Determine the scalability of a product.
- Recall the best time to initiate customer acquisition.
- Review the differences between a passionate employee and an obsessed employee.
- Recognize the benefits of domain experience when building a founding team.