StartUp Founders: How They Stop You
Dear Reader,
As a founder, no matter the epicness of what you build, you’re up against forces determined to see you fail. Every customer you win is someone else’s loss. This competition is governed by Porter’s 5 Forces & 7 Barriers, with the battle for market relevance and dominance fought at the meso level. (đť•Ź Tweet)
The same market forces keeping you out are what you’ll leverage to get in, and what you’ll use to defend your position. Your job is to fight like hell to cross someone else’s moat, then build a bigger one yourself.
TLDR; This week’s barriers to entry workbook breaks down the core market forces that grant you the privilege to compete.
LAST WEEKS FRAMEWORK:
​2.1 Market Sizing: TAM, SAM, SOM.
LETS GET INTO IT:
At the Micro level, everything’s in your control: your vision, team, and tech – in racing terms, it’s the car. The Macro level are forces you adapt to but can’t control, broader landscape trends, regulations, market shifts. It’s the racetrack. The Meso level is the race itself, where the competitors are, the fight is. You don’t have direct control, but your strategies and actions can influence the outcome.
The meso level is governed by the dynamics of Porter’s Five Forces and the 7 Barriers to Entry. These aren’t academic concepts, they’re the realpolitik of business. They determine how you enter the market and how you then compete, survive, and thrive.
This workbook might help you think about thinking:
Legacy players have learned from Netflix, Uber, Airbnb, that you are coming for them. Market arrogance, regulation and scale was never and will never be enough of a moat for a determined founder. You will always find a way.
VC’s see market forces as indicators of opportunity. Strong forces (Red Ocean) indicate a proven market but a busy space (lower margins) vs weak forces (Blue Ocean) the opportunity for higher margins, but no proven market.
Competitors craft defenses early, from the restrictive like proprietary tech or binding contracts – to those that are value led and cultivate loyalty. Whether you lock customers in (hope not) or win them over, these are your blueprints for your future defense.
What’s crazy is the moment you break into the market, you build your own defenses. Not from malice but instinct. It’s the startup way: offering what no one else does, the fight, the extra mile, the access to your roadmap, the do whatever it takes. What sets you apart is not just the product but how deeply you care. That’s how you break into a market, one customer at a time.
Seems weird to do a newsletter on Porter’s 5 and not list them:
- New Entrants: Easy or hard market entry? Your first major hurdle and defense.
- Supplier Power: Can you partner, negotiate or are you at their mercy?
- Buyer Power: Do customers depend on you, or are their options open?
- Substitutes: How easily can another product replace yours?
- Competition: Who are your rivals, and how fierce is the fight?
As always, you are welcome to grab time with me.
Good luck.
— James