Barriers to Entry…
The other day, as I was discussing my company with an adviser, he started to ask about barriers to entry. I have thought long and hard about this, and I believe that there are very effective barriers for existing market players which prevents them from doing anything similar.
However, I didn’t – and still don’t – have a good answer for barriers against new market entrants, and was freely willing to say so.
As I left our meeting, my adviser again commented on the subject, wondering both about patent protections and the potential for lawsuits (most some of my competitors are very willing to turn to lawsuits as a business strategy to tie down and defocus the opposition).
I commented that if we actually got sued, it meant we were doing something right, as we had become successful enough to appear on our competitors radar screen. At that point, if we were in a defensible position (which is my intent), given our success we should be able to work our way out of the situation.
However, I’m not a strong proponent of software patents and didn’t have a really good answer. In part because I had previously stated that should we be sued for patent infringement we could almost always rework our code to work around the issue.
Today comes word from Josh Kopelman of First Round Ventures and founder of Half.com that Half’s software patent was finally issued – 8 years later. And that he and other VCs (Brad Feld, etc.) don’t really believe that patent (pending) is a valid barrier.
When I look at everything else about me, my partner, our concepts & architecture, experience, etc., I start to say, “we have XXX”. Then I realize that everyone else has XXX as well:
- There’s no new black magic in what we’re doing. We’re just integrating existing technology into a unique package that provides significant value-add for our customers – more so than any of the existing solutions on the market. But once what we’re doing is known, others can emulate…
- We have significant experience in doing what we’re doing. But there’s nothing that prevents someone else from forming a team with even greater experience to do the same things….
- We are domain experts. However, there are other domain experts….
While having validated my views on patents, I’m still left with the open question….
Tags: Barriers, patents