Why the best products don’t always win, AKA how to build a moat around your business

Sachin Rekhi lists 3 reasons better products don’t always win:

  • Switching costs: too expensive to switch to the better product.
  • Lack of distribution: your product is better but you can’t get it to the customer.
  • Network effects: everyone is using the other company’s product, and that matters.

The same points can be viewed as a defensive strategy: If you want to build a moat around your product, make sure it has high switching costs and network effects, and lock up distribution.

Many successful companies have done this. But as customers, we fear and resent lock-in. The alternative strategy is typified by Amazon: relentless focus on generating value for customers, resulting in remarkable trust and brand promise.

One thought on “Why the best products don’t always win, AKA how to build a moat around your business

  1. Pingback: Why network effects matter so much | A Founder's Notebook

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