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The Agile Startup: Quick and Dirty Lessons Every Entrepreneur Should Know by Matt Richter-Sand, Jeff Scheinrock

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You Need a Moat

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A moat is a deep, broad ditch that surrounds a castle and provides it with a preliminary line of defense. In their heyday, moats rendered the enemies’ most effective weapons useless. You need a moat. In other words, you need a sustainable competitive advantage. It’s possible to start a business without a moat, of course, but it makes your life a lot harder. The problem is that as soon as you’re successful, you can expect company. Remember the hundreds of Groupon copycats? With a moat, you can seize the advantage by keeping enemies away and customers protected.

How do you create a moat? There are many forms of barriers to entry, including intellectual property (patents), know-how (trade secrets), speed of execution, brand awareness, cost advantages, government protection, and distribution rights. The most commonly employed technique is patent protection. With the right patent protection, the smallest company can hold Google or Microsoft at bay. If you don’t have much of a moat right now, brainstorm ways to create one and work it into your plan. Down the road, you’ll be glad you did.

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