Your Business Is Your Castle. Here’s How to Build a Moat Around It.

Fahim Saleh
Dec 13, 2018 · 5 min read

So, you’ve managed to build a successful business.

You’re in the black and profits are steadily increasing. The company culture is happy and healthy. Investors are pleased.

But what’s stopping it from all suddenly crashing down?

Probably not as much as you’d like to think. The cold hard truth is that you never know when a new competitor will arise and edge aggressively into your market share. Or a copyright infringement lawsuit will take a big bite out of your budget. Or a co-founder suddenly has a change of heart and departs, sending your company’s leadership into disarray.

Entrepreneurship is inherently risky and unpredictable, but there are ways to mitigate these risks. You need a “moat” — essentially, a barrier that can protect your business from potential encroaching forces.

You need a “moat” — essentially, a barrier that can protect your business from potential encroaching forces.

So what do these moats look like? Here are a few examples.

1. A brand moat.

A strong, well-known brand is incredibly powerful.

Think BMW, Gucci, Apple. The logo alone proves the value of their products. And because of that, people will shell out big bucks without question for their cars, shoes, and computers. Of course, there are products that compare, or at least compete, with these companies’ products.

But there are very few brands that do.

In other words, name value is, well… valuable.

Here are just a few of the critical elements of an effective brand moat:

Consistent messaging across your entire brand — because conflicting messaging will prevent consumers from understanding what your brand is all about.

At Gokada, for example, the motorcycle taxi app we’re building in Nigeria, we’ve branded every bike, plus the helmets for both driver and passenger, with our big “G” logo. That’s a totally different look from the other okadas, or motorcycle taxis in Lagos.

Communicating your product’s unique advantage — because you need to stand out and gain a competitive advantage somehow.

Our unique advantage at Gokada is our unrivaled safety. Our bikes are clean, high-quality and our drivers put safety first, so when our users get on a green bike emblazoned with our logo, they know they’re in good hands.

Associating your product with quality at every opportunity — because regardless of price point, people want to feel like they’re getting a good value.

At Gokada, we’re thinking about opening several motorcycle gear shops selling high-quality Gokada biking gear. When people think about the best motorcycle brand in Lagos, we want them to immediately think “Gokada.” And getting lots of high-quality, branded gear out there is one of the best ways to do so.

Of course, building a well-respected, household name brand is no easy task. But if you manage to do so, your company can very quickly become a formidable force in your market.

2. A technology moat.

One of the best ways to stay on top of your market is to develop your own, best-in-class technology.

Since its inception in 2009, PrankDial — the online prank phone call platform I created — has always been focused around offering the best user experience available in its (very specific) market.

We achieve that by constantly looking for ways to improve the platform. Today’s product features customization features and voice recognition technology, so the “caller” waits until the receiving person pauses to speak and can add in details the user selects to make it more believable. We also started sending the user a cartoon video of their friend getting pranked by a funny character. Needless to say, we’ve come a long way from the simple MP3 recordings I implemented on the website from my bedroom nine years ago.

Today, we’ve generated over $10 million in revenue — and nobody can compete with us. We’ve got so much technology that we’ve developed over the years, that we have a huge head start on any other company breaking into the business (and there have been several).

My advice to companies looking to leverage using technology is this:

If you have the resources, create proprietary tech so no one else can use it.

Focus heavily on research and development.

Use trial and error to figure out what technology customers do and don’t like. This will help you be certain you’re taking the best route.

If you’re a tech company, know that you’ll have to be the absolute best to truly make your mark, because hivemind results in everyone using only the best product available.

3. A network moat.

If your business relies on a social network — think Tinder, Facebook, Instagram — then you’ve got to get everyone you know and their moms using the product.

Because, not only is word-of-mouth influence powerful, but once everyone is using your product, people won’t want to abandon it — because it’ll feel like they’re abandoning all their friends and family who use it as well.

The best and most obvious example of a powerful network is, of course, Facebook. When virtually everyone is using your product, it’s tough for competitors to gain even a small share of the market — especially if the value of your product is dependent upon other users.

Setting out to create a business based on a network of users is a daunting task — but when you succeed, the potential is vast, as proven by the Facebooks, Twitters, and Tinders of the world.

4. A regulatory moat.

Use the law to your advantage whenever and wherever possible.

Mark your territory through patents, trademarks, and licenses. Protecting your product with a patent means no one can touch it for 14–20 years, depending on the type of patent you’re awarded. A trademark will protect your name for 10 years. That’ll give you plenty of time to gain customers and dominate your market.

In Lagos, for example, a safety law recently went into effect that prohibits motorcycles under 200cc to operate as taxis. Here’s why that matters: almost all of the bikes in Lagos were under 200cc. At Gokada, we saw this as an opportunity to introduce a fleet of bikes with large enough engines to operate legally as taxis. And now, we’re the biggest name in the game by far.

Some entrepreneurs view laws purely as restrictions. Start looking for ways to use laws and regulations to your benefit, and you may just find major competitive advantages.

It’s also important to know, however, that in emerging markets, getting a license can be tricky — often you have to know someone. That can be frustrating to startup founders, but it’s simply something you have to adapt to.

In order to build a truly strong business, you have to create ways to protect it. And if those safeguards are powerful enough, they can help make your company too strong to fail.

Fahim Saleh

Written by

CEO, Gokada

Data Driven Investor

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