(lifted from a CPO coaching call this week)
We're not there yet, but may be close to the moment where startups or existing competitors can agent-scrape their way through your production application and clone all of the accessible parts. Create a reasonable likeness of your hard work in not much time. That will gut development speed as a fundamental advantage. How will we support long-term value and long-term revenue in a flood of lookalikes?
In traditional strategic language, what moats can we construct other than time-to-market to defend our products and deliver ongoing value? What business models and real-world advantages can we cultivate? We need to find non-code advantages. Here are a few categories.
Scale and Market Dominance
A lot of tech markets are winner-take-all: scale is its own advantage. Being the biggest is its own defense.
- Social networks. We've seen a lot of social apps launched since
TwitterX went to the dark side. Most haven't flourished, because the tech is much less important than the audience. Why join a platform with few of the people you want to interact with? - Bookstores and general ecommerce. Vendors need to be where their buyers are; consumer shopping habits are sticky. Even if Amazon is consuming the world.
So if you're in a race for market dominance, tech (especially PLG) that helps outgrow competitors and upstarts may be your best play. Otherwise you may need to find some small, tight-knit community that has strong reasons to reject the dominant player.
Algorithms, Datasets, Transactional Info
If you have gigabytes of non-public data or difficult-to-duplicate information, you may have a long-lived strategic asset. What do you know, and what insights can you generate, that tomorrow morning's open LLMs won't reveal?
- The literature is clear that forecasting stock movements from public data is a losing game, but huge spending in high-frequency algorithmic trading suggest that super-fast NYSE network connections and massive compute power and a few physicists can be combined to get ahead of individual human investors.
- Until recently, the CDC was the nexus for worldwide intelligence about infectious diseases and still-emerging pandemics. They knew things – and had very sophisticated models – which didn't exist anywhere else.
- As long as ADP continues to process a lot of US payrolls, their employment surveys will have unique advantages.
Decades ago, I was at a clearinghouse for worldwide dial-up access. (Yup, that long ago!) We had multiple providers in each city, and routed dialup requests to the local number that had the best connect success and data speeds. That meant we knew, city by city, whether AT&T or MCI or Sprint (or BT or Telstra or Vodafone) had the best service in each place. Using that hard-won information, we built a service that was demonstrably better than any of our suppliers – since we optimized location by location, which was always better than any single supplier network. And (icing on the cake), we sold network quality data back to our suppliers. Our transactional quality dataset became a strategic weapon.
Trust and Community
We'd like to believe that our product or service provides heartfelt value to our users – outside of any core economics. But it's really tough to grow a fan base that sees we care and share and always take their side – in the face of relentless revenue pressure. (Slippery slope of carefully curated advertising.) But there may be a moat for you if you're willing to turn down seductive-but-sneaky monetization moves that users might not immediately notice.
Craft sites that really feature crafters and emphasize advice over kits? Dojo/gym management apps that truly serve trainers? Home improvement sites with honest reviews? Trust, enthusiasm and community are increasingly fragile in the age of instant price comparisons.
Familiarity (A Leaky Moat)
Traditionally, users learned how to use a particular application (Excel or Salesforce), and didn't want to learn any alternatives. Competing products had to be "Salesforce-like" or have an Excel mode to coax away long-time users. (Who moved my cheese?) I think we'll see this fall away. Smart product teams should be able to spin up 'work just like that other product' agents which mimic a variety of interaction models. One moat drained.
BTW, I'm not a lawyer, but IMO copyrights and trademarks and "don't steal my code" legal remedies are too slow and too uncertain. We have to win in the market.
SOUND BYTE
Product strategy has always been much more than "ship it fast." The moats aren't (just) in our code: they are in what we know, who trusts us, and business models that are genuinely hard to clone.