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hard to develop technology is a very narrow moat. You have the first problem that well-funded competitors can almost certainly replicate whatever you built if
by powowow 7y ago
hard to develop technology is a very narrow moat.
You have the first problem that well-funded competitors can almost certainly replicate whatever you built if they care to do so.
You then have a second problem that well-funded competitors can almost certainly market inferior tech as being equal to or superior to yours, if they care to do so.
- pbreit 7y agoNever, ever, ever, ever worry about anyone copying your stuff. Depend on your unique insight. No one can copy that. If in the extremely rare circumstance that someone copies you, be thrilled! That means you are building something valuable (which is extremely rare).
- streetcat1 7y agoHard to develop tech is a huge moat. The issue here is timing. Hard tech buys you time. Most of the M&A today is not done due to hard to replicate, but due to time. Even if I can replicate the tech, I do not have time to do that.
- powowow 7y agoCan you name, say, three notable software businesses whose advantage was hard-to-replicate tech?
- phonon 7y agoKsplice, kdb+, Google search, Mathematica
- eloff 7y agoGoogle (search), Microsoft (OS, especially early on), Dreamworks (rendering, animation), Oracle (database, early on before OSS database got good). It's the exception, not the rule though.
- powowow 7y agoMicrosoft licensed their early OS. Dreamworks led with SKG and the tech followed. Oracle always had meaningful tech competition and fought with sales/marketing. Google is pretty true, though.
- streetcat1 7y agoYes. Any tech acquisition over 1B is never done for customers. For example deep mind from google. Just this week Intel bought Havana labs for 2B due to their AI chip hardware. Also, look at what AMD is doing to Intel. This is pure tech play (and pure moat). The underlying rule in play, is that the tech business is bound to "leapfrogging", I.e. a better technology can destroy companies almost overnight (see the case of Nokia). So hard tech is more important than customers. Look what Tesla is doing to GM, etc.
- powowow 7y agoI said software business, so I'm not sure why you're bringing up AMD or Intel. As for billion dollar acquisitions.... Visio, GitHub, Yammer, LinkedIn, Instagram, Parse, etc.... shit-tons of them are done for market reasons.
- deleted 7y ago[deleted]
- streetcat1 7y agoRight, network effects are also moat.
- powowow 7y agoBut I thought you said nobody ever did large acquisitions for customers.... weird, I must be thinking of somebody else. Since it would make no sense for you to try to take both of those sides at once.
- streetcat1 7y agoWhy not. There are no sides here. There are different moats. If you want a more elaborate view: http://reactionwheel.net/2019/09/a-taxonomy-of-moats.html http://reactionwheel.net/2019/09/a-taxonomy-of-moats.html
- deleted 7y ago