Sometimes you just really nail that idea. It’s something everyone wants. It’s clearly the future. Getting pointed in the right direction is just not enough. You can’t just point at the moon, you’ve got to build the goddamn spaceship. You’ve got to figure out the problem to solve, and in that step the questions you ask are:
Who am I building for? Who’s my audience? What problem do they have?
And then next, you’ve got to figure out how you’ll solve it.
Is my solution possible?
Is it feasible?
How much will it cost?
What tech today exists and how much of it can I use?
Is it open-source?
Is it licensable?
Is there research out there that’s already been published,that’s a new method? And what are the alternatives?
How do people solve it today?
Who else has tried this?
And what’s gone wrong with that solution?
What do I have that nobody else has?
Is it technology?
Is it something that would prevent other peoplefrom just copying it?
The best moat of allis often actually real pure technology.
Sometimes it’s relationships to customers, for instance, if you’re selling to an enterprise and you can close an extra good, initial lighthouse customer that would unlock an entire industry. Envoy, the sign in, check in service that you’ve probably already used in Silicon Valley, they got started by selling Airbnb in their first few clients.
Is it a better go-to-market?
Is there content?
Is there some relationship?
Is there something that you do that nobody else does?
What is that?
That’s a great place to start because that helps you make something that is a lot more protect-able. The difficult thing after doing this exercise is sometimes there isn’t a sufficient answer. There might be too many nos, there might be too many weak spots in your pitch. Some basic examples? The audience might be too small, your problem might not be felt severely enough for someone to try to fix it, it might not be possible to build what you want, given the state of technology today. Or it might be possible but it might be too expensive to make it viable for the people who might pay for it. There might be obvious alternatives that are basically just as good or even cheaper. There might be ways that it’s being solved today that are basically fine.
You might have no advantages over other people trying to create this. And this might be the moment of maximum disillusionment. That’s the time when people start thinking, “Maybe I shouldn’t work on it.” On the other hand, this set of questions helps you think about the questions you need to answer. This focuses you on the things that you need to work on as a founder. And if you’re a great engineer, that’s why building tech can be some of the best ways to do that. You can find a moat, a reason to be that might make it a lot better, cheaper, or faster than all the alternatives.
If you’re a technologist, being able to use technology to be your moat is sort of the bread and butter, right? The best examples are things that basically have never happened before. Standard Cognition is a great example of this because they have a pure technology moat. They’re actually putting to practice a new method that has never been commercialised before. And as a result, they have something that even Amazon cannot duplicate. They can provide cashier-less checkout for a price that is 1/10th the cost, possibly, 1/100th the cost of state of the art that’s out there right now. But that’s not the only way for this to actually come together.
One example from my own past was ChangeCard actually. Changecard, if you don’t remember, was a dead simple POS platform that let you exchange physical cash with digital money at the POS terminal and this itself was a brand new thing that nobody else had ever tried. The main reason was that people thought that digital money wasn’t safe it wasn’t possible to provide a good experience that way.
It was pre-contactless ChangeCard was doing, on day one, a thing that people thought was not possible. But we did it using pretty simple software. It wasn’t machine learning. Frankly, it was IF statements. And that simple innovation was enough to be a great moat for us. Nobody else tried to copy us right off the bat because they couldn’t figure out the thing that we had figured out. That was enough for us to become a top EU fintech startup and do it in a way where we weren’t sort of fending off a thousand other copycats.
So, yeah, there’s not just one way to get this moat. What was true for us in 2014, remains true today.
Without that moat, without that reason to be, without that thing that other people did not have, we didn’t have a good reason to exist. We could take this technological limitation, which is anti-spoof technology, and use it to be enough of a moat to get our first hundreds of thousands of users. And that’s a thing that you can do too. Maybe not exactly that but that’s the shape of something hat you should be looking for when you’re working on a new startup.
It’s just prudent to ask: Why me?
What do I have that nobody else has?
And if that answers nothing, you’ve got to keep working.
Thanks for reading.