What competitive advantage do you have over the rest of the market?

Posted by Ventures Online on Fri Oct 09 2020
It has been said that in business; anything of value that can be copied will be copied, including features, marketing strategy, and pricing. With that in mind, it is almost inevitable that every angel, seed fund, or venture capitalist you propose your great idea to will ask you something along the lines “What if a big company copies your idea and develops the same website as yours after your website goes public?” The point they will be getting at here is “What competitive advantage do you have over the rest of the market?”

In today’s world, merely being the first of your kind and existing to serve a not yet exploited segment of the market, is not alone sufficient to provide your startup with a sustained competitive advantage. Ultimately, even when your startup has such a first-mover advantage, it will still require some other form of sustainable competitive advantage and defensibility to maintain its edge as new entrants enter the market to compete.

Sustainable competitive advantages that truly differentiate you from the rest of the market include network effects, intellectual property, economies of scale, trade secrets, data, and brand; not things like “We are passionate”, “We work hard”, or “We have more features” because it would not be that difficult for every other business in the market to simply incorporate “passion”, hard work and more features to their products or services.

“Competitive advantage is a company’s ability to perform in one or more ways that competitors cannot or will not match.” — Philip Kotler