B2C Startups — The most important thing — Defensibility !

Most of the relevant B2C ‘TECH’ startups have one of these three elements of defensibility.

  1. Tech Superiority — GOOGLE search is just simply technologically better!
  2. Network Effect — FACEBOOK is difficult to replace for a reason. You can make a Snapchat catering to a different demographic or a Whatsapp for a very specific different purpose, but tough to beat FB in its game now.
  3. Data — YELP might not be the best performing valley company but all the best in even trying to make another Yelp. They have millions of reviews of everything and are the defacto comparison engine.

One common property of these elements is that over time the defensibility just keeps on adding and just keeps becoming more and more formidable. Lets take a simple case of Flipkart and Amazon in India.

Case 1: Flipkart vs Amazon in India

Lets do a quick analysis on Flipkart. Do they have any of the above three elements of defensibility?

  1. Tech — Well, not really. Except a few recommendations there isnt much tech defensibility in any ecommerce company.
  2. Network Effect — Sellers are not sticking to any one platform and buyers go for the cheapest one. Basically if today I start marketing an ecommerce company that sells cheaper and delivers faster everyone will start buying from my company.
  3. Data — No proprietary data!

It was therefore easy for an Amazon to enter and just start spending to gain more and more market share.

Case 2: Zomato

Can a YELP or a DianPing (Chinese Yelp) come to India and make another Zomato? Have you heard of any other relevant competitor of Zomato? My tone must have suggested the answer. The reason is…. Zomato is defensible. The reviews are the proprietary data that no one else has and that database of reviews is growing and becoming more and more formidable. Zomato might not have any awesome tech yet, they dont even have any network effects (I dont even know if my friends use Zomato), but Zomato has the third element of defensibility, Data! Yes, ZOMATO HAS DATA DEFENSIBILITY.