Build a Moat Around Your Startup OpenMic

When entrepreneurs latch onto an idea and are ready to move forward with that idea, one of the most important factors to consider is can you create a moat for your new idea. This often-overlooked step can be a make-or-break situation regarding the success of a new company.

For this week’s show, we will be discussing with a panel of experts the importance and strategies to create a moat around your new company.

The idea of building a moat around your company makes reference to the water moats built around castles that can protect the inhabitants from invading forces. Or, in this case, other companies trying to take market share from your new business.

Bill Gross, founder of technology incubator Idealab, has created over 150 companies with more than 45 IPOs and acquisitions. He has also performed extensive research on failed startups and has created a list of 5 factors that can be used as moats in the success of a new company.

  1. Idea – Novelty/Differentiation, β€œTruth” that no one else sees, competitive moats
  2. Team/Execution – Efficiency/Effectiveness, Adaptability
  3. Business Model – Clear path to generating customer revenues
  4. Funding – Raising money for initial funding, follow-on & growth
  5. Timing – Way too early, early, late

Here are some ideas to create that moat:

  • Trademarks and patents = products that are innovative
  • Quality and user experience can be a mote – as opposed to treating products as a commodity
  • Getting and keeping great talent
  • The idea creation is the time to start to build the moat
  • Unique selling point
  • Exclusivity in your supply chain and/or distribution channel
  • A sales objection can pinpoint a moat item/customer issue that could lead to a competitive advantage
  • Non competes can be a moat
  • If the brand can be big enough that can be a moat
  • Building brand authority
  • Building an innovative business model 
  • Making sure that there is a market for your company that is not being served or underserved

Listen to the full session above!

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