Jun 11, 2022Liked by Nicolas Bustamante

Thanks for the great insights Nicolas. Love it.

Software is a though market, because you're not just competing with the person across the street, you're competing with the world. With just a laptop and an AWS account, anyone has access to an infinite amount of computing capabilities.

I've been thinking about startup ideas almost all my life and I don't actually think I ever came up with an idea that was truly original. You start googling and discover that lots of people have had the same idea for a long time. In order to create a monopoly, not only do you have to be right, but everyone else needs to be wrong. And that's risky business. You might end up in a blue ocean, with no competition, but also no food.

I really like the idea of choosing what not to do. It's hard, but it forces you to focus on a clearly defined value proposition. It's especially valuable for startups where you have few resources by definition and need to create some value to some customers.

Do you think "technically hard to execute" could be a defensible competitive moat ? I'm thinking of a product that's complex enough that few people would even try to copy it. You don't need to be smarter than everyone else, but you need to combine orthogonal skills that few people have. Something like, it's really hard to be the best at boxing or the best at chess, but you could become the best at chess boxing. (It's a real sport by the way: https://en.wikipedia.org/wiki/Chess_boxing)

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I've got a feeling that I'm selling sand now haha! You're right in your analysis, although I would say that starting your first business as a sand seller, when you're poor, is a less risky way in life to succeed on an existing market. Especially a market where customers have already been educated by competitors, and the market research has already be done for you. That way you gain time, and the financial barrier to entry is lower in R&D. Because there's already a market and you can compete to deliver a better product at a lower price, you can still reap the benefits (although much lower in absolute value because it's obviously a race to the bottom speaking of pricing — towards being a commodity).

It's exactly what we are doing at Crisp, and to me, coming from a non-entreprenarial family, it was really the most rational bet. Crisp now provides us with plenty financial resources to settle in life, depend on no one (as self-mades), and one day become the water seller through our next venture. Only this time, taking more risks and creating an actual product which doesn't exist yet.

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Excellent piece, thank you Nicolas.

There is an excellent notion (a bit long!) about competitive moats, that I think you will find insightful : https://www.notion.so/The-Defensible-Startup-9decc67b9ac249cf839f55f78dd13197

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Again a very interesting piece, thanks!

Your example of Vanguard reminds me of an analysis I did a few years ago on robo-advisors, indeed, it was Vanguard that came out as the leader of this market thanks to its moat: https://medium.com/@benoit_deangelis/pourquoi-la-revolution-promise-par-les-robo-advisors-na-t-elle-pas-eu-lieu-34f64b0f51ab

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