Really intrigued by how he got into this: “I thought I could do it just as well and cheaper,” effectively trading product market fit issues for direct competition.
You absolutely must have a "unique" selling point, even if it's just being cheaper. Otherwise, your competitors are just a click away.
I'd argue the author HAS found PMF, just not the kind that gets you to $1b.
A lot of software that on the surface does the "exact same thing" often has different nuances, either to the business or the product that makes them appeal to different niches in the market.
Understanding the nuances and exploiting the market niche is your only goal when starting a business. It's not something you ever do or think about when working on software, but people who strike it out on their own quickly realize that simply building is not enough, you MUST give people a good reason to use your software. Just because you don't see or understand the nuances, does not mean they are not there.
They could all be replaced and do 90% of the job immediately and a week later figure out the last 10%.
As as for work, coinbase is not the only exchange, square is one of many, meta is another social media site.
I don't think you have to have a unique selling point all the times. You can make an exact product as the market leader and layer on top a distribution that you own or you sell the product to a underserved groups. It will work too. In fact, this way of doing business happens a lot to non software products.
In theory? Maybe.
In reality? Your scale and delivery depend on the competence of your devs and your processes and there's a very good chance you could do it better than all the big companies from your garage as a solo dev if it has a relatively small feature set.
His moat is a combination of pricing + cost structure + time spent to cumulate the customer base.
If someone were to enter the market and try to take his business, they will have to consider if their conditions can result in the same offerings. I don't think it's easy to match the same offerings.
The idea of an "economic moat" comes from Warren Buffett[1] and it was/is part of his investing philosophy to look for companies with some sort of unique feature which allows them to dominate markets and create effective monopolies on their particular niche. It makes sense in that context but it doesn't necessarily apply everywhere.
What if you're just trying to create a business that gives you a good lifestyle and you're not looking to dominate? Maybe the market is big enough that if you just take a piece of it that's plenty. There are plenty of businesses out there that are offering a product that is one of a range but the market is large enough to sustain multiple offerings.
Not everyone needs a moat because not everyone is trying to build a castle.
[1] I believe he first used it here in his shareholder letter where he describes GEICO's low costs as creating a moat that competitors couldn't cross. May have been earlier but most people credit the invention of the term to him anyway https://www.berkshirehathaway.com/letters/2016ltr.pdf
Agreed.
>What if you're just trying to create a business that gives you a good lifestyle and you're not looking to dominate? Maybe the market is big enough that if you just take a piece of it that's plenty. There are plenty of businesses out there that are offering a product that is one of a range but the market is large enough to sustain multiple offerings.
Yes. In fact, the majority of businesses in the world are probably this way.
>Not everyone needs a moat because not everyone is trying to build a castle.
That's a brilliant line and metaphor. Gonna steal and share it whenever and wherever I can. Thanks.
The fact that it's not what most new businesses try to do is true, but doesn't mean anything. 99% of people who go to university don't do it to create new science, but 1% eventually go the academic route and do create new science (hopefully). That's not an affectation, it's just a different goal.