Building a startup is tough, but creating a strong moat around your business can make all the difference.

Creating a subcategory or defendable niche. Identify an underserved market and claim it as your own. Salesforce launched CRM when there was nothing else against which to compete. Yet Hubspot was much more successful at building a large business out of a category that Salesforce had largely ignored: the midmarket. They became the leaders in that specific sector.

🫀 Community-led growth. Growth driven by users spreading the word is powerful. Everybody’s on Instagram: you’re on it, your mom’s on it, your dog’s on it. That’s what we like to call viral growth. That’s when your growth is truly user-driven. Or alternatively, you can artificially drive growth by partners and by your network, creating a buzz and broadening reach.

🦿 Proprietary technology and user experience. Make life easier for users, and you win. That was what Spotify, Zoom and Stripe did. Stripe made online payments easier for developers; Zoom made video calls easier in general. It’s not about things looking good; it’s about things working differently in ways that actually solve real problems.

🪡 Customer acquisition advantage. Bring down your customer acquisition costs through community, partners and ecosystems; if you’re able to acquire your customers cheaper than your competitors, that’s a huge advantage. Even if you’re a late entrant into the market, that will help you to dominate the marketplace.

🪢 Marketing and brand building. Powerful brand is a very effective moat: Airbnb is an iconic brand – people have an emotional connection to the brand: that’s value! The most powerful moat of all surrounds a brand that customers are emotionally committed to: the customers become advocates of the brand. You can’t compete with an army of evangelists.

💸 Money. Sometimes, brute monetary force will suffice. Microsoft has often spent more on marketing than anyone else, cloned features, and otherwise clung to the high end of the market after its heyday in the 1990s. Throw enough money at your strategy, and it will get you further and keep your rivals away.

🚧 Regulatory barriers. Understanding and exploiting the regulations is a moat in itself. Think of Uber and the number of regulatory hurdles it faced. If a company is really good at navigating such waters, not only has it created a moat, but it also makes it more difficult for a competitor to swoop in.