The Defensibility Excuse
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1/"Defensible Technology" is the rally cry for trigger shy investors when they can find no other excuse.
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2/The fact is that early on, nothing is defensible and no intelligent startup spends their early money on patents.
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3/Take for example, the top 5 USA consumer internet "unicorns" according to WSJhttp://graphics.wsj.com/billion-dollar-club/ …
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4/These unicorns include (in order) Uber, Snapchat, Pinterest, Airbnb, and Spotify. Lets look at their early defensibility.
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5/Uber: Simple app using location services and two sided marketplace. Also had some drivers. Copyable? Absolutely!
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6/Airbnb: Totally indefensible. They don't own the real estate, the tech is commodity, they succeeded by great timing & tons of hustle
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7/Pinterest: LAMP stack based photo sharing site. 100's of other sites already did the same thing, Pinterest just got it right & got lucky
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8/Snapchat: Python/Google Cloud stack, social networking, app, good timing. Nothing defensible early on.
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9/Spotify: Arguably the most complex tech stack of the 5, but still not defensible. Labels let lots of companies have streaming rights.
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10/So the 5 biggest unicorns had nothing defensile but are worth a collective $87 BILLION (YE 2014)
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11/Conclusion? Defensibility as an excuse not to invest is a polite way of saying "I'm scared and don't believe in the market or the team".
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12/So Mr/Ms Startup you should MOVE ON from any investor who says that. RUN FAST! Note: this does not apply to healthcare & hardware.
Arlo Gilbert
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