Hard work is the unspeakable defensible position
My co-founder at GrubHub and I have engaged about 30 venture capitalist firms over the last 2 years. As a result of that process we’ve learned quite a bit about things you absolutely never say. These are trigger words that get you mentally thrown out the door before the meeting is physically over. Here’s a short list:
There’s probably a bunch others. But the one question we’ve always had a really hard time answering is:
What is your defensible position?
The problem is this: Can a larger funded entity with this exact same idea execute this better than you and take the market. Unfortunately the natural answer to this question is yes. There are a few things that can prevent this: patents, trade secrets, private data.
So, what is defensible? Hard work. That is, if you are willing to (or better yet already have) put the focused energy into building something that is inherently difficult to build odds are that nobody else is going to bother. Or at least very few people are going to bother.
One example of this would be building a model with network effects. The classic example is fax machines. Everytime somebody else buys a fax machine it makes my fax machine more valuable. This was especially true when only 500 people had fax machines. Now every office needs some device that works on the fax machines’ protocol even though we have better technology to do the same thing. Another example is data collection. Look at some of the big data aggregators like InfoUSA. They supply sales and content data to some huge percentage of businesses. Its just too darn hard to go out and collect all that data manually.
Now obviously, you need to have something in place to protect the results of your hard work being easily copied from you. But, that is really just a matter of more hard work 😉