Lesson Details:
February 14, 2020
Video Transcription: After I made the last video about creating a mold for your business I had additional ideas on this topic as it pertains to first-time entrepreneurs and a lot of my students and that is that instead of thinking of how do you create a mug when you're a first-time entrepreneur or starting your business you're not making a moat you are facing a moat that's the challenge that most of my students have and most first in time entrepreneurs have and that's what I coach people on all the time usually the modes are competition it's always like you're in a difficult market most niches today are very competitive usually first-time entrepreneurs have lack of resources and if for some products like maybe dating apps or something like that there's really it's really hard to get critical mass which is essentially a lot of activity of people that you're bringing together on your platform and of course if you're entering a market something you're selling your product there's probably some products out there that are already very successful in your niche and what happens is of course this leads to frustration and failure and quitting and people wonder well why does why do people fail so much in business but really that's why is because you're facing that moat that's really what's happening and that's why I always talk about niche niche niche nishan down you don't have to stay in a tiny niche forever but it has to be your foothold where you start to get some success because if you're going up against big competitors you're actually fighting against their mode which is tricky so that's really something to think about now.
I also want to bring up another issue there is this idea of a moat and there's an idea of a barrier to entry you might have heard this term barrier to entry what's the difference between them well a barrier to entry it prevents people from starting it's a deterrent from starting a moat it helps you compete against competitors after they've started so a moat helps during competition since earlier we talked about moats let's talk about some examples or barriers to entry patents are barriers to entry of course if you patent some technology nobody can use that also if you create technically complex products it doesn't deter everyone obviously cuz a lot of good programmers can copy that but it deters many potential competitors and of course additional barriers to entry is a business that requires a lot of money or addition or other resources to get started and lastly let's talk about this idea of being first to market a lot of people obsess about it I think it's overhyped because being first to market means you're innovating and innovating carries more risk it even has more risk if you're facing something like a moat because most experiments just by their nature they fail and a lot of my clients especially when they had unique ideas it kind of became a point of obsession and stress for them because they always focused on like I gotta go I gotta go faster I gotta go faster I gotta go faster and that created this kind of stress and disparition.
Which actually resulted in a lot of bad desperate business decisions like hiring the wrong people or partnering with the wrong people which like to fail you're actually rather than success and even if you create something great once you create something great there will be a lot of copycats a lot of people copying your business they will look at your history and your trajectory as a business which you've done the mistakes you've made they'll use that they're not gonna make the mistakes you made those mistakes will be expensive learning experiences for you but for your competitors they'll be like oh thanks for teaching me what not to do and so for every competitor it would be cheaper to get into that business because you've done the hard work which is the innovation and you'll have a lot of copycats if you're successful a lot of people will copy you there's no question about it at least they'll try even if you have barriers to entry animals that people will still try to compete with you and another thing that is important is if you are truly first to market you have to ask yourself a very important question why am I the first to market it's very easy to assume oh because I'm smart or because I'm creative or because of I'm innovative but really there's like six billion people living in the world surely other people have had these ideas surely other people have tried your idea so you just that maybe you didn't do enough research or you don't know your market very well or even worse historically there's a lot of people who tried your business but all failed so you could be kind of looking around and seeing no competitors but you're like literally standing on a graveyard of past businesses that failed trying to do the same thing which we're doing so you have to evaluate ok how did this business fare historically and am i doing something better that actually will lead me to success so that I don't make the same mistakes that earlier businesses that fail did and there is one truism that is something to take away from this and that winner is the company that outcompetes long term you can jump out of the gate and you can get a head start but by being first to market by having defenses but it's the company that out competes long term there's examples of both companies that have had competition that past them and not like if you look at Facebook they basically just executed the social networking space better because before that there was MySpace and thousands upon thousands if not tens or hundreds of thousands of companies try to create social networks and still Facebook is the king of it but but the first company myspace who was the first serious company in that space they failed Facebook out competed them but if you look at a company like uber they were the first entrant in that space of taxi apps but they ended up out competing even though there's so many apps competing with them in every which way they're still the leader so in this case offense is the best defense because whoever executes better longer wins.
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