Spinning the Attention Wheel
Design for Democracy

Barriers to Entry

We've got a great business with a great model.   Often I get asked "But what are your barriers to entry from competition?"   Now if your first answer is your patents, think again. Fence_2 That doesn't prevent anyone from copying what you do.   When I was at Novell many years ago, we viewed patents as a great tool for negotiating a deal.   So, we do have some very clever technology.  Not enough.  We also have a very unique business model.   Very niche oriented segmentation.  Maybe or maybe not enough.  But the one thing you can have which cannot be copied is relationships.   Great post on this on Tom Peter's blog. 

In an age of interchangeable products and easily duplicated services, customer relationships have become one of the most powerful competitive advantages available to a business.

Here's a personal example.  We do all of our banking with Square 1 Bank.  Why?   Because they spent the time to get to know us.  Know our needs.  Understand our vision.   And Bob, Leslie, Stasia, Amos and others are always available and quick to help whenever we need them.   And we return the favor whenever we can.   Should Silicon Valley Bank come calling when we are successful would we change?   I doubt it.  Because we've spent a lot of time with our bankers.   And once you have a good relationship, you never want to leave.

Comments

christopher carfi

great post, and the t. peters quote is absoLUTEly spot-on. -c

Mary Schmidt

Or, in this case, "Good fences DON'T make for good neighbors."

The landscape is littered with people who thought patents were the be-all, end-all. Then they couldn't get funding (sure, a patent is good, but how are you going to commercialize it?); they couldn't get past prototype stage (things that work in the lab often break and burn in the real world); or a larger, lawyered-up company stole their idea - and the start-up didn't have the money to fight.

I've also worked with clients that were so afraid someone would steal their idea, they wouldn't tell a VC or anybody else why they should care about the idea, much less fund or buy it.

Somebody else can always "do what you do" in some form or fashion. The only thing they can't duplicate is you and your relationships.

Mary Schmidt

Or, in this case, "Good fences DON'T make for good neighbors."

The landscape is littered with people who thought patents were the be-all, end-all. Then they couldn't get funding (sure, a patent is good, but how are you going to commercialize it?); they couldn't get past prototype stage (things that work in the lab often break and burn in the real world); or a larger, lawyered-up company stole their idea - and the start-up didn't have the money to fight.

I've also worked with clients that were so afraid someone would steal their idea, they wouldn't tell a VC or anybody else why they should care about the idea, much less fund or buy it.

Somebody else can always "do what you do" in some form or fashion. The only thing they can't duplicate is you and your relationships.

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