3min chapter

Software Social cover image

Competitive Advantage and Moats for Small SaaSes, Part 2

Software Social

CHAPTER

The Sources of Competitive Advantage

There are going to be sources of competitive advantage. They may not be sources of a moat that would make Sequoia perk up and give you two hundred million dollars or whatever But they might be enough to build you a nice tidy little five ten twenty million AR business. And yeah quite frankly, I think most people would be happy with a hundred thousand MR or AR our business, right? Like so even if you're building something in a perfectly competitive market like me, right? You can still find those sources of advantage that give you a profitable business that is durable and defensible.

00:00
Speaker 2
I Think it's just taking ten million dollars and funding and turning it into 15 over the course of ten years would be amazing for some people but For most investors, yeah, you're not you don't have a machine where you can put ten in and get 200 out or something It's not that but is it profitable is it growing is it defensible? Give me all those things for all the reasons to talk about the beginning But not every business is is the first kind of frankly even in the utility businesses what happens? They're profitable. They're making profit But a lot of that upside also gets regulated out or they reach maturity
Speaker 1
or they don't have it's right They can only have ten or fifteen percent profits, right? Or
Speaker 2
they're stuck exactly so their stock price ends up maxing out for completely different reasons It's like congratulations. You won the game of monopoly But now you like that's the end of the road start something else But which are both great businesses. They're durable and defensible, but Yeah, I agree talking to I love that we sort of end up back at the fact of talking to people is The origin of some kind of competitive advantage or figuring out where they are at least right like even if
Speaker 1
you have Even if you have an app that Matt sitting there things that he could code up in a weekend or that Microsoft or whatever could you know code up in a weekend, right? Even if you have that kind of a business where people are copying it There are going to be sources of competitive advantage They may not be sources of a moat that would make Sequoia perk up and give you two hundred million dollars or whatever But they might be enough to build you a nice tidy little five ten twenty million AR business And yeah quite frankly, I think most people would be happy with a hundred thousand MR or AR our business, right? Like so even if you're building something in a perfectly competitive market like me, right? You can still find those sources of advantage that give you a profitable business that Can and then over time as you have that probability as you keep going You can build those other sources of competitive advantage that are very hard for people to replicate overnight and Are more if not defensible it'll at least take them a really long time to swim across your moat
Speaker 2
That's right.

Get the Snipd
podcast app

Unlock the knowledge in podcasts with the podcast player of the future.
App store bannerPlay store banner

AI-powered
podcast player

Listen to all your favourite podcasts with AI-powered features

AI-powered
podcast player

Listen to all your favourite podcasts with AI-powered features

Discover
highlights

Listen to the best highlights from the podcasts you love and dive into the full episode

Discover
highlights

Listen to the best highlights from the podcasts you love and dive into the full episode

Save any
moment

Hear something you like? Tap your headphones to save it with AI-generated key takeaways

Save any
moment

Hear something you like? Tap your headphones to save it with AI-generated key takeaways

Share
& Export

Send highlights to Twitter, WhatsApp or export them to Notion, Readwise & more

Share
& Export

Send highlights to Twitter, WhatsApp or export them to Notion, Readwise & more

AI-powered
podcast player

Listen to all your favourite podcasts with AI-powered features

AI-powered
podcast player

Listen to all your favourite podcasts with AI-powered features

Discover
highlights

Listen to the best highlights from the podcasts you love and dive into the full episode

Discover
highlights

Listen to the best highlights from the podcasts you love and dive into the full episode