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> Rather, the two big problems are margin and, worse for a startup, inventory costs. You know there was a time long long ago where those were considered barri

> Rather, the two big problems are margin and, worse for a startup, inventory costs. You know there was a time long long ago where those were considered barriers to entry, and that barriers to entry were considered a good thing?

mcculley 14y ago
Were they a good thing for startups? I would think that those barriers to entry are a good thing only for well capitalized existing businesses.
- pg 14y ago
  Barriers to entry are good for those who can overcome them. That could mean either big companies or startups depending on what type of barrier it is.
  - wallawe 14y ago
    It's also noteworthy that startups who can overcome these barriers have not only the advantage over other startups, but also the incumbents who are clunkier and less agile. sweetspot
  - zaptheimpaler 14y ago
    "The brick walls are there for a reason...They are there to stop the other people!" - Randy Pausch
tptacek 14y ago
Barriers to entry are a good thing for incumbents and for the market leader. They work against all new entrants to a market, including the entrants YC picks.
- jpdoctor 14y ago
  > Barriers to entry are a good thing for incumbents and for the market leader. There was a time long long ago where it was also considered a good thing for startups, so that young funded companies would not be competing with bootstrapped/small-angel deals.
  - tptacek 14y ago
    There is a kind of startup that comes pre-packaged with a solution for some perceived barrier to entry. For instance, your team could include a world expert on some heretofore intractable problem in your startup's problem space. Or, you could be the first mover in a market with significant network effects, and you could be raising when you already have significant traction. In these cases, barriers to entry are a good thing. In other words: the barriers to entry behind you are defenses for your success. The barriers to entry ahead of you are obstacles to your success. No part of this has changed since the 1990s.
    - jpdoctor 14y ago
      > The barriers to entry ahead of you are obstacles to your success. If you choose it right, they are obstacles to everyone's success, which is kind of the point. A well-funded company that can make a biz work with lower-margins and inventory costs will likely not be competing with bootstrapped (for example) companies. Edit: pg is more pithy below - Barriers to entry are good for those who can overcome them.
batgaijin 14y ago
Why on earth would barriers to entry be a good thing? As far as I can tell they are just a proxy method of limiting the true competition capitalism is supposed to offer.
- dllthomas 14y ago
  Different kinds of "good". If you don't limit the true competition that capitalism is supposed to offer, then you can't make economic profit in the long term. If your goal, in starting a company, is to continue to make out-sized profits, then there being barriers to entry that you can overcome better than others is a good thing. One way, but not the only way, of overcoming obstacles better is simply overcoming them first: if the cost of overcoming the obstacles is more than the upside in a competitive environment, then you can rake in monopoly profits without it being worth it for others to join you. Most of this is not necessarily "good" for the consumer or the economy as a whole - although if the barriers to entry are natural and it means that problems are being addressed that otherwise wouldn't be addressed at all, then it might be.

mcculley 14y ago

Were they a good thing for startups? I would think that those barriers to entry are a good thing only for well capitalized existing businesses.

pg 14y ago
Barriers to entry are good for those who can overcome them. That could mean either big companies or startups depending on what type of barrier it is.
- wallawe 14y ago
  It's also noteworthy that startups who can overcome these barriers have not only the advantage over other startups, but also the incumbents who are clunkier and less agile. sweetspot
- zaptheimpaler 14y ago
  "The brick walls are there for a reason...They are there to stop the other people!" - Randy Pausch

tptacek 14y ago

Barriers to entry are a good thing for incumbents and for the market leader. They work against all new entrants to a market, including the entrants YC picks.

jpdoctor 14y ago
> Barriers to entry are a good thing for incumbents and for the market leader. There was a time long long ago where it was also considered a good thing for startups, so that young funded companies would not be competing with bootstrapped/small-angel deals.
- tptacek 14y ago
  There is a kind of startup that comes pre-packaged with a solution for some perceived barrier to entry. For instance, your team could include a world expert on some heretofore intractable problem in your startup's problem space. Or, you could be the first mover in a market with significant network effects, and you could be raising when you already have significant traction. In these cases, barriers to entry are a good thing. In other words: the barriers to entry behind you are defenses for your success. The barriers to entry ahead of you are obstacles to your success. No part of this has changed since the 1990s.
  - jpdoctor 14y ago
    > The barriers to entry ahead of you are obstacles to your success. If you choose it right, they are obstacles to everyone's success, which is kind of the point. A well-funded company that can make a biz work with lower-margins and inventory costs will likely not be competing with bootstrapped (for example) companies. Edit: pg is more pithy below - Barriers to entry are good for those who can overcome them.

batgaijin 14y ago

Why on earth would barriers to entry be a good thing? As far as I can tell they are just a proxy method of limiting the true competition capitalism is supposed to offer.

dllthomas 14y ago
Different kinds of "good". If you don't limit the true competition that capitalism is supposed to offer, then you can't make economic profit in the long term. If your goal, in starting a company, is to continue to make out-sized profits, then there being barriers to entry that you can overcome better than others is a good thing. One way, but not the only way, of overcoming obstacles better is simply overcoming them first: if the cost of overcoming the obstacles is more than the upside in a competitive environment, then you can rake in monopoly profits without it being worth it for others to join you. Most of this is not necessarily "good" for the consumer or the economy as a whole - although if the barriers to entry are natural and it means that problems are being addressed that otherwise wouldn't be addressed at all, then it might be.