14 ms·

Hard is not defensible (2017)

79 points by saadalem 6y ago

staycoolboy 6y ago
This is dead on. I've also heard this referred to as "tactics" and "strategy". "Tactics" are various bullet-lists of things you need to repeatedly do to maintain best practices (eating protein & lifting). "Strategy" is generally longer term and requires clever thinking (like Pythagoras).
Ozzie_osman 6y ago
Couldn't Google be an example of this? Search is a hard problem, even if you've got MSFT-level resources. There are definitely economies of scale and some weak network effects that help companies like Google, but I'd argue it's most because they do something hard better than anyone else.
- jdquey 6y ago
  Search is a hard problem, which increases the barriers to entry. But once a competitor has a method to crawl the Internet, that particular defensibility is gone. I'd argue the data network effect is what gives them most of their defense. Now that they have a corner on what creates better search results, this is harder for others to defend against.
- simonh 6y ago
  They're not dominant because it's hard though. Bing is similarly capable, but even if it gained a clear edge would it really win out over Google? Market dominance has little to do with hardness. Making a new cola isn't hard, but brand recognition and ubiquity are huge advantages on a different axis.
  - zippy5 6y ago
    At least in Coke’s case, defensibility comes from the fact that making cola is hard due to regulation and supply chains. Coke is grandfathered into being allowed to import coca leaves (they now remove the cocaine) and buys up alot of the worlds vanilla supply. There is a reason even Pepsi can't replicate the flavor. You still have a great point about the value of Coke’s branding / marketing.
  - patmorgan23 6y ago
    Habit is also massively important in what products /brands people use. Even if there is a superior, cheaper product many people will continue using the same product because that's what they always done.
- microtherion 6y ago
  One product that seems bodybuilding-hard is Google maps. When Apple maps had its calamitous introduction, I remember claims (by Google itself, I think), that Google was a decade ahead, and would remain ahead for the foreseeable future. But for several years now, it seems to me that Apple maps has been more or less on par technically, and the case for rolling their own maps instead of relying on a third party has, if anything, gotten stronger.
zomglings 6y ago
I agree with the article, but I also disagree with investor focus on defensibility over hardness. If you are investing in a generic software startup at an early stage, it is much more reasonable to ask them: "How many months/years of head start do you have over the competition, and how will you use my money to solidify this head start into an unfair advantage in your market?" than to ask them: "What stops someone else from doing this?" Because if they are an early stage, generic software startup, chances are that the honest, no bullshit answer to the second question is, "Nothing." And that doesn't mean that it would be a bad business to invest in.
- skrebbel 6y ago
  I fully agree, but I've yet to meet a VC that really appreciates honest, no bullshit answers. I've talked with plenty VCs and my impression is they strongly prefer founders that are happy to bullshit them, and ask questions particularly to test that. My theory is that the good ones do this on purpose, and the bad ones got bullshitted so often that they got used to it. I don't think it's a terribly bad strategy even. If you're looking for Travis Kalanick style "growth at all costs" type founders, then brutal honesty is pretty low on the list of important character traits.
  - deleted 6y ago
    [deleted]
  - linuxftw 6y ago
    > I fully agree, but I've yet to meet a VC that really appreciates honest, no bullshit answers. That's because you need to be able to effectively bullshit your customers and users. If you can bullshit the VC, well then surely, you can bullshit anyone.
solidasparagus 6y ago
I thing this article is missing a third type of hard: time-consuming/long-tail hard. Google solved a hard problem, but it's a technical problem and it could be replicated by another company, particularly since there are probably a lot of developers who have experience working on Google's Search. But the problem is that there is an absurdly long tail of features (curated news sources, relevant social media results, answer boxes, etc) and being able to serve that long-tail is part of what makes Google so valuable. It would take years for even a well-funded team to catch up to Google in this regard and the high barrier-to-entry is absolutely a moat.
- simonh 6y ago
  I think that's just a type of bodybuilder hard. It just takes a lot of effort, discipline and time to do it.
  - solidasparagus 6y ago
    I disagree. Bodybuilder hard at described in the article is just a matter of effort. High barrier-to-entry means that you need extreme resources to start competing. I think they are quite different.
    - paulryanrogers 6y ago
      There is also social-hard in the network effects of incumbents and familiarity to overcome.
    - simonh 6y ago
      Having resources is just a different thing, they’re not a kind of work. Getting the resources is work, sure, but it takes either cleverness (maths hard) or effort (bodybuilder hard) to get them, or is not hard at all because you already have them. But actually building the things you cited is bodybuilder hard.
      - solidasparagus 6y ago
test7777 6y ago
Tbh, it looks like they are ignoring the elephant in the room: intellectual property...
- wmf 6y ago
  I don't think patents are defensible against FAANGs either.
- hi_im_miles 6y ago
  Yeah, this article is assuming a competitive environment when in reality there exists an arsenal of state tools available for corporations to entrench themselves as monopolies: IP protections, subsidies/contracts, regulatory capture, etc etc.
konschubert 6y ago
What about Intel?
- verall 6y ago
  Silicon is bodybuilding-hard. It is extremely hard so there are few competitors, but it is inherently a series of extremely expensive coordination problems. To churn new architectures every couple years takes an oiled machine of thousands.
  - jmastrangelo 6y ago
    Don't forget that Intel had a few decades where nearly all software was written for their x86 chips. This reinforced every computer needing to have intel, and only recently has the move to web apps made it easier for devices to use something other than intel.
jpm_sd 6y ago
> In startups, being defensibile means competitors can’t catch you once you’re ahead. I'm not sure this is a useful concept. Investors are burning billions of dollars trying to ensure that Uber-or-Lyft [or insert other unicorn battle here] gets un-catch-ably "ahead", meanwhile neither is a successful business in the traditional sense. There are tons of successful businesses in the world that just execute well and deliver value in exchange for money. They're not succeeding because they are "ahead" of the competition, they are succeeding because there is plenty of room for multiple competitors to succeed.
- deleted 6y ago
  [deleted]
- LeifCarrotson 6y ago
  The difference is whether or not that business has network effects that reduce the viability of competitors. For example, in the Uber-or-Lyft 'battle', sure, there are and have always been private car companies and private drivers, but when you want a car you're likely to open one or maybe two apps on your phone and call the quickest/cheapest option. Similarly, Facebook competitors have a hard time getting off the ground because when you're the only one in your friend group on a new social network, there's no one to talk to. Meanwhile, a new email provider has a small amount of work to do to catch up with all the security regulations, but then can just provide value to its customers without having to worry about 'defensibility'. A single app aggregating Uber, Lyft, taxi, and 3rd-party car services on one screen would open those up for competition. Similarly, a federated Facebook that provided various social networks in one client would let you pick your hosting provider, configure your own feed, and communicate with people on other platforms.
  - jpm_sd 6y ago
    Sure, but I think it's stupid to be so focused on creating the next network-effect-monopolizer. There just aren't as many opportunites to do that as VC money seems to think. In the Uber-or-Lyft example, most drivers drive for both. Nice network monopoly you've got there.
  - 6y ago
shard 6y ago
Bodybuilding hard seems to conflate 2 types of hard tasks: move-a-mountain-with-a-shovel hard, where something is time consuming, such as having to hand-label millions of images for machine learning datasets, and quit-heroin hard, where something is against human desires, such as convincing people to abandon their current way of doing something for something else that is a short-term loss but a long-term gain, for example switching to a more performant but incompatible CPU architecture. Math hard, as the article says, is not really defensible, since copying is easy. Move-a-mountain hard is more defensible along the time/money axes, competitors need to throw time/money at the problem to catch up. Quit-heroin hard is the most defensible, since customers will loath to pay the switching price regularly. Of course, it's not as black-and-white as this. All products have a mix of the three, and its where the product lands in the mix that determines the promotion strategies that the company should take.
- XargonEnder 6y ago
  I like how you identified the hard not to do factor
mumbisChungo 6y ago
All you have to do to be "defensible" in many industries is observe the status quo, but add decent customer service.
YeGoblynQueenne 6y ago
>> It’s unrealistic to think that you’ll ever have a totally unique insight, let alone one other people couldn’t come up with if they really wanted to. These gentlemen would beg to disagree: https://en.wikipedia.org/wiki/Wright_brothers https://en.wikipedia.org/wiki/Wright_brothers Before the Wrights, numerous others had tried and failed to achieve what they achieved. Of course, once the Wrights succeeded (or rather, some time after) their idea was free for the taking. But the Wrights did have a "unique insight" that was only their own.
- gen220 6y ago
  Tangentially-addressed in the PS at the bottom: > PS. My colleague Zefi Hennessy Holland raised an insightful point about hard to find market secrets that I can’t phrase better myself. > > He said ‘If Math Hard is finding the solution to a problem many people know about, Market Hard means finding an industry problem that few people know about through a lot of hard work… Your competition can copy your moves but not the underlying insights that made you make them.’
- NoOneNew 6y ago
  Uh... free for the taking is not exactly right. They patented the shit out of it. Look up the "Wright brothers patent war" they waged world wide for licensing fees. It took WW1, with the USA extremely far behind in aircraft innovation, for the gov to end their patent trolling adventure.
- 013a 6y ago
  The article says its unrealistic; not that its impossible. Its unrealistic to tell every star High School athlete that they'll become the next million-dollar NFL player. But, its not impossible; in fact, they bring on million-dollar players every year. The point isn't that its impossible; its that its improbable.
_bxg1 6y ago
I would tend to think the key is the "soft" aspects of your business. The things that can't simply be copied or commoditized. Customer service, being in tune with your target market and their wants and needs, responsiveness to feedback, institutional knowledge. Everyone still uses Slack even though it is not an especially hard product to build, and even though Microsoft and Google have both shipped clones that work fine and integrate with their other products. Why? Part of it is brand recognition and a network effect, but I think an important factor is that this is all that Slack does. Slack really really cares about making the best chat tool for people to use at work. They put all of their energy into constantly improving it; they give it their human attention. The same is partly true of Dropbox vs Google Drive and OneDrive. Google Meet and Microsoft Teams don't really matter to those companies. They'd like it if you used them, they'll allocate some cash to keep them going. But it wouldn't be a huge deal if they lost the battle and those products died. A company's culture, institutional knowledge, and focus can't simply be copied.
Animats 6y ago
"Math-hard" is not defensible in the US because the patent system has been weakened so much. VCs in the 1980s and 1990s looked for a strong patent position. VCs today look for a strong marketing position. VCs as a class made money in the 1980s and 1990s made money. That stopped working around 2000, when throwing money at something to buy market share took over. (Yes, this will be modded down by the "IP should be free" crowd.)
sabas123 6y ago
Can somebody explain to me why we care about these classifications, and why I wouldn't want to divide these into more (slightly) arbitrary groups?
karmakaze 6y ago
One thing that isn't mentioned is that the 'intrinsic' body-building-hard isn't fixed for everyone. Obligatory "Beating the Averages" http://www.paulgraham.com/avg.html http://www.paulgraham.com/avg.html
jmastrangelo 6y ago
I highly recommend the book 7 Powers by Hamilton Helmer. Helmer defines "Power" as the ability to retain meaningful profit margins for a meaningful period of time. Each of the 7 Powers is a method he has seem companies use to retain this (network affects, switching costs, etc.). Very insightful read.
pedalpete 6y ago
I think there are a few issues with this article. Firstly, body-building hard ignores the fact that a competitor can't build up muscle overnight, and every day they spending building their strength is a day you continue building on yours. They need to be able to catch you, which they can't do. Another analogy would be a marathon run. If you're already half-way through the marathon when others are just starting, the competitors need to have a strategy or capability which lets them run faster than you. It's another way to look at why you need to be 10x better than a competitor. You need to be moving faster than they are.

79 points by saadalem 6y ago

This is dead on. I've also heard this referred to as "tactics" and "strategy". "Tactics" are various bullet-lists of things you need to repeatedly do to maintain best practices (eating protein & lifting). "Strategy" is generally longer term and requires clever thinking (like Pythagoras).

Ozzie_osman 6y ago

Couldn't Google be an example of this? Search is a hard problem, even if you've got MSFT-level resources. There are definitely economies of scale and some weak network effects that help companies like Google, but I'd argue it's most because they do something hard better than anyone else.

jdquey 6y ago
Search is a hard problem, which increases the barriers to entry. But once a competitor has a method to crawl the Internet, that particular defensibility is gone. I'd argue the data network effect is what gives them most of their defense. Now that they have a corner on what creates better search results, this is harder for others to defend against.
simonh 6y ago
They're not dominant because it's hard though. Bing is similarly capable, but even if it gained a clear edge would it really win out over Google? Market dominance has little to do with hardness. Making a new cola isn't hard, but brand recognition and ubiquity are huge advantages on a different axis.
- zippy5 6y ago
  At least in Coke’s case, defensibility comes from the fact that making cola is hard due to regulation and supply chains. Coke is grandfathered into being allowed to import coca leaves (they now remove the cocaine) and buys up alot of the worlds vanilla supply. There is a reason even Pepsi can't replicate the flavor. You still have a great point about the value of Coke’s branding / marketing.
- patmorgan23 6y ago
  Habit is also massively important in what products /brands people use. Even if there is a superior, cheaper product many people will continue using the same product because that's what they always done.
microtherion 6y ago
One product that seems bodybuilding-hard is Google maps. When Apple maps had its calamitous introduction, I remember claims (by Google itself, I think), that Google was a decade ahead, and would remain ahead for the foreseeable future. But for several years now, it seems to me that Apple maps has been more or less on par technically, and the case for rolling their own maps instead of relying on a third party has, if anything, gotten stronger.

zomglings 6y ago

I agree with the article, but I also disagree with investor focus on defensibility over hardness. If you are investing in a generic software startup at an early stage, it is much more reasonable to ask them: "How many months/years of head start do you have over the competition, and how will you use my money to solidify this head start into an unfair advantage in your market?" than to ask them: "What stops someone else from doing this?" Because if they are an early stage, generic software startup, chances are that the honest, no bullshit answer to the second question is, "Nothing." And that doesn't mean that it would be a bad business to invest in.

skrebbel 6y ago
I fully agree, but I've yet to meet a VC that really appreciates honest, no bullshit answers. I've talked with plenty VCs and my impression is they strongly prefer founders that are happy to bullshit them, and ask questions particularly to test that. My theory is that the good ones do this on purpose, and the bad ones got bullshitted so often that they got used to it. I don't think it's a terribly bad strategy even. If you're looking for Travis Kalanick style "growth at all costs" type founders, then brutal honesty is pretty low on the list of important character traits.
- deleted 6y ago
  [deleted]
- linuxftw 6y ago
  > I fully agree, but I've yet to meet a VC that really appreciates honest, no bullshit answers. That's because you need to be able to effectively bullshit your customers and users. If you can bullshit the VC, well then surely, you can bullshit anyone.

solidasparagus 6y ago

I thing this article is missing a third type of hard: time-consuming/long-tail hard. Google solved a hard problem, but it's a technical problem and it could be replicated by another company, particularly since there are probably a lot of developers who have experience working on Google's Search. But the problem is that there is an absurdly long tail of features (curated news sources, relevant social media results, answer boxes, etc) and being able to serve that long-tail is part of what makes Google so valuable. It would take years for even a well-funded team to catch up to Google in this regard and the high barrier-to-entry is absolutely a moat.

simonh 6y ago
I think that's just a type of bodybuilder hard. It just takes a lot of effort, discipline and time to do it.
- solidasparagus 6y ago
  I disagree. Bodybuilder hard at described in the article is just a matter of effort. High barrier-to-entry means that you need extreme resources to start competing. I think they are quite different.
  - paulryanrogers 6y ago
    There is also social-hard in the network effects of incumbents and familiarity to overcome.
  - simonh 6y ago
    Having resources is just a different thing, they’re not a kind of work. Getting the resources is work, sure, but it takes either cleverness (maths hard) or effort (bodybuilder hard) to get them, or is not hard at all because you already have them. But actually building the things you cited is bodybuilder hard.
    - solidasparagus 6y ago

test7777 6y ago

Tbh, it looks like they are ignoring the elephant in the room: intellectual property...

wmf 6y ago
I don't think patents are defensible against FAANGs either.
hi_im_miles 6y ago
Yeah, this article is assuming a competitive environment when in reality there exists an arsenal of state tools available for corporations to entrench themselves as monopolies: IP protections, subsidies/contracts, regulatory capture, etc etc.

konschubert 6y ago

What about Intel?

verall 6y ago
Silicon is bodybuilding-hard. It is extremely hard so there are few competitors, but it is inherently a series of extremely expensive coordination problems. To churn new architectures every couple years takes an oiled machine of thousands.
- jmastrangelo 6y ago
  Don't forget that Intel had a few decades where nearly all software was written for their x86 chips. This reinforced every computer needing to have intel, and only recently has the move to web apps made it easier for devices to use something other than intel.

jpm_sd 6y ago

> In startups, being defensibile means competitors can’t catch you once you’re ahead. I'm not sure this is a useful concept. Investors are burning billions of dollars trying to ensure that Uber-or-Lyft [or insert other unicorn battle here] gets un-catch-ably "ahead", meanwhile neither is a successful business in the traditional sense. There are tons of successful businesses in the world that just execute well and deliver value in exchange for money. They're not succeeding because they are "ahead" of the competition, they are succeeding because there is plenty of room for multiple competitors to succeed.

deleted 6y ago
[deleted]
LeifCarrotson 6y ago
The difference is whether or not that business has network effects that reduce the viability of competitors. For example, in the Uber-or-Lyft 'battle', sure, there are and have always been private car companies and private drivers, but when you want a car you're likely to open one or maybe two apps on your phone and call the quickest/cheapest option. Similarly, Facebook competitors have a hard time getting off the ground because when you're the only one in your friend group on a new social network, there's no one to talk to. Meanwhile, a new email provider has a small amount of work to do to catch up with all the security regulations, but then can just provide value to its customers without having to worry about 'defensibility'. A single app aggregating Uber, Lyft, taxi, and 3rd-party car services on one screen would open those up for competition. Similarly, a federated Facebook that provided various social networks in one client would let you pick your hosting provider, configure your own feed, and communicate with people on other platforms.
- jpm_sd 6y ago
  Sure, but I think it's stupid to be so focused on creating the next network-effect-monopolizer. There just aren't as many opportunites to do that as VC money seems to think. In the Uber-or-Lyft example, most drivers drive for both. Nice network monopoly you've got there.
- 6y ago

shard 6y ago

Bodybuilding hard seems to conflate 2 types of hard tasks: move-a-mountain-with-a-shovel hard, where something is time consuming, such as having to hand-label millions of images for machine learning datasets, and quit-heroin hard, where something is against human desires, such as convincing people to abandon their current way of doing something for something else that is a short-term loss but a long-term gain, for example switching to a more performant but incompatible CPU architecture. Math hard, as the article says, is not really defensible, since copying is easy. Move-a-mountain hard is more defensible along the time/money axes, competitors need to throw time/money at the problem to catch up. Quit-heroin hard is the most defensible, since customers will loath to pay the switching price regularly. Of course, it's not as black-and-white as this. All products have a mix of the three, and its where the product lands in the mix that determines the promotion strategies that the company should take.

XargonEnder 6y ago
I like how you identified the hard not to do factor

mumbisChungo 6y ago

All you have to do to be "defensible" in many industries is observe the status quo, but add decent customer service.

YeGoblynQueenne 6y ago

>> It’s unrealistic to think that you’ll ever have a totally unique insight, let alone one other people couldn’t come up with if they really wanted to. These gentlemen would beg to disagree: https://en.wikipedia.org/wiki/Wright_brothers https://en.wikipedia.org/wiki/Wright_brothers Before the Wrights, numerous others had tried and failed to achieve what they achieved. Of course, once the Wrights succeeded (or rather, some time after) their idea was free for the taking. But the Wrights did have a "unique insight" that was only their own.

gen220 6y ago
Tangentially-addressed in the PS at the bottom: > PS. My colleague Zefi Hennessy Holland raised an insightful point about hard to find market secrets that I can’t phrase better myself. > > He said ‘If Math Hard is finding the solution to a problem many people know about, Market Hard means finding an industry problem that few people know about through a lot of hard work… Your competition can copy your moves but not the underlying insights that made you make them.’
NoOneNew 6y ago
Uh... free for the taking is not exactly right. They patented the shit out of it. Look up the "Wright brothers patent war" they waged world wide for licensing fees. It took WW1, with the USA extremely far behind in aircraft innovation, for the gov to end their patent trolling adventure.
013a 6y ago
The article says its unrealistic; not that its impossible. Its unrealistic to tell every star High School athlete that they'll become the next million-dollar NFL player. But, its not impossible; in fact, they bring on million-dollar players every year. The point isn't that its impossible; its that its improbable.

_bxg1 6y ago

I would tend to think the key is the "soft" aspects of your business. The things that can't simply be copied or commoditized. Customer service, being in tune with your target market and their wants and needs, responsiveness to feedback, institutional knowledge. Everyone still uses Slack even though it is not an especially hard product to build, and even though Microsoft and Google have both shipped clones that work fine and integrate with their other products. Why? Part of it is brand recognition and a network effect, but I think an important factor is that this is all that Slack does. Slack really really cares about making the best chat tool for people to use at work. They put all of their energy into constantly improving it; they give it their human attention. The same is partly true of Dropbox vs Google Drive and OneDrive. Google Meet and Microsoft Teams don't really matter to those companies. They'd like it if you used them, they'll allocate some cash to keep them going. But it wouldn't be a huge deal if they lost the battle and those products died. A company's culture, institutional knowledge, and focus can't simply be copied.

Animats 6y ago

"Math-hard" is not defensible in the US because the patent system has been weakened so much. VCs in the 1980s and 1990s looked for a strong patent position. VCs today look for a strong marketing position. VCs as a class made money in the 1980s and 1990s made money. That stopped working around 2000, when throwing money at something to buy market share took over. (Yes, this will be modded down by the "IP should be free" crowd.)

sabas123 6y ago

Can somebody explain to me why we care about these classifications, and why I wouldn't want to divide these into more (slightly) arbitrary groups?

karmakaze 6y ago

One thing that isn't mentioned is that the 'intrinsic' body-building-hard isn't fixed for everyone. Obligatory "Beating the Averages" http://www.paulgraham.com/avg.html http://www.paulgraham.com/avg.html

jmastrangelo 6y ago

I highly recommend the book 7 Powers by Hamilton Helmer. Helmer defines "Power" as the ability to retain meaningful profit margins for a meaningful period of time. Each of the 7 Powers is a method he has seem companies use to retain this (network affects, switching costs, etc.). Very insightful read.

pedalpete 6y ago

I think there are a few issues with this article. Firstly, body-building hard ignores the fact that a competitor can't build up muscle overnight, and every day they spending building their strength is a day you continue building on yours. They need to be able to catch you, which they can't do. Another analogy would be a marathon run. If you're already half-way through the marathon when others are just starting, the competitors need to have a strategy or capability which lets them run faster than you. It's another way to look at why you need to be 10x better than a competitor. You need to be moving faster than they are.