Defensibility — Venture Capital

A popular question VCs ask entrepreneurs is, how is your startup defensible?” Defensibility in the business world means how will your business maintain it’s competitive edge? This can be done through moats. Like a castle moat, a business moat protects it from its competitors. These moats are built over time and are difficult for a competitor to replicate. For example: Facebook has a network effect moat, Coca-cola has a brand moat, and Toyota has an economies of scale moat.

This mental model helps companies determine where they should invest their time and resources. How are we going to build our moat? Or how are we going to build a deeper, wider moat?

I think this model is applies to our individual lives as well, personal defensibility as I like to call it. What are you doing to maintain your competitive edge? What moat are you building?

From a career perspective, this gave me clarity on where I should invest my time. For example, building relationships, reading, and writing, create personal moats, that compound over time and are difficult for others to replicate over night.

March 20, 2020 · Mental Models · Venture Capital

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