If you are a coder and you’ve developed software which you want to sell on the marketplace, you need to determine a strategy to protect your business in the long run.
And if I write “protect”, I don’t mean from a legal point of view because most people cannot afford large legal departments. It’s more about how to protect your business in practice.
Here’s a simple truth: you need to create a barrier of entry for new market participants — the larger, the better. In other words, make it more difficult for individuals and businesses to steal your ideas, your customers, and your business.
In this article, I discuss several barriers of entries which you can create to protect your business.
These can be summarized as follows: you need to do something nobody else can do. This is your gold standard.
If you can create value that nobody else can create, you have a huge barrier of entry. You’ve created a monopoly — in your small niche. This makes your business very stable. Check out the excellent book “From Zero to One” written by Peter Thiel.
Example 1: Google has created a de-facto monopoly for search because nobody else can create a search engine that finds relevant results as Google.
Example 2: Amazon has created a monopoly on worldwide product distribution. They can ship products within one day all over the world. They have invested billions and created a huge infrastructure. No other company, even delivery companies such as DHL can possibly steal this business from Amazon. Therefore, Amazon is a very stable company. No “drop shipper” or marketer on the web can really attack the 600-pound Gorilla Amazon. Because nobody can create such a logistics infrastructure. It took Jeff Bezos 20 years and billions of Dollars to create such an efficient infrastructure. Now, Amazon is untouchable and Jeff Bezos is the richest man in the world.
How can you create such a barrier of entry as a coder? As you may have realized by now, it’s almost impossible (after all, it’s a barrier of entry, isn’t it?). If it was easily possible to create a barrier of entry, it wouldn’t be a barrier of entry by definition.
So to create a real, powerful barrier of entry, you need to do something that only a few people can do in terms of time invested (person-months), money invested (Dollars), and expertise invested (learning time).
But you neither have access to capital, nor time that cannot easily be matched by somebody else. So the only option you have left is to create a barrier of entry in terms of quality.
So here’s what you should do: you should do the hard things, the things other people won’t do, leverage your strengths in different areas and combine them in a way that only you can.
Niche down and reduce the size of the marketplace. This gives you protection because, usually, large companies do not focus on small niches. Maybe in the future, they will though. For example, Amazon focuses on delivering millions of niche products and is very successful with this strategy. Still, you as a niche seller can offer the deepest level of service and tailor your business to perfectly serve a tiny need better than anybody else. If you can achieve this, you’ve created a great barrier of entry.
You also create a small barrier of entry if you become a likable person. If people like and trust you, and they want you as a person, nobody else can deliver this to them, but you. You have a monopoly on yourself. So if people miss you and want you, you’ve created a nice little barrier of entry for other market participants — and one that’s very difficult to overcome by large corporations.
These are the two best barriers of entries that I can think of: be the best in your niche and be authentic. Do this, and you can build a sustainable, long-term coding business that thrives.
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