Friday, October 27, 2006

Defensibilty and Web 2.0

Yesterday I participated in a Start-up Speed Dating event. In this case, it was about getting feedback on improving our pitch. If you are unfamiliar with the concept ours went like this - the start-up gives their pitch for 5 minutes and then the investor gave 5 minutes of feedback. The entrepreneur then moved to the next table, and we repeated this 10 times. Extremely intense but very exhilarating, and a great way to get feedback. Highly recommended for any entrepreneur. A common question that gets asked during this type of exercise is 'how defensible is your business', or 'what are the barriers to entry'. Patents tend to be what people focus on in this area, but as Guy Kawasaki points out in a recent blog post there are many different options on how to answer this question, relying on patents isn't necessarily the way to go.

Since my start-up falls into the Web 2.0 category, I found this post particularly interesting, as defensibility always comes up. Although I do like Guy's first response to such a question: “Defensible Web 2.0 company” is an oxymoron, I tend to use Guy's #9 option or a slight variation on it, with a little of #10. Additionally, we are trying to avoid falling into the patent diversion at least for the time being and focusing on building the product and finding a customer.

In the end Guy summarizes with the following communication goals as an outcome:
  • You’re street wise, so you know that you can’t depend on patents.
  • You understand that very few companies are truly defensible for reasons other than because they either achieved critical mass or had a nine-month head start.
  • You have domain expertise, connections, and what you’re doing is hard.
  • You’re not the only team that can do this, but you’re in a better position than most.
  • You believe that you can build a business better than anyone (a little cockiness is necessary for an entrepreneur to survive).

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