How many times have you heard the phrase "Startup unfair advantage"?
What does that even mean?
An Unfair Advantage is an advantage that is so difficult to replicate or acquire, that it enables you to outpace your competition and operate in a less crowded market.
Why does it matter so much?
90% of startups fail. And there are SO MANY reasons why your business won’t succeed in the long run.
What the TechCrunch covers don't mention are the significant unfair advantages that success stories have when they start.
What are the 5 forms of unfair advantage?
- Market intelligence
- You have been in the field long enough to know PRECISELY what is wrong and could be drastically improved in your industry. For years, you have attended conferences, forums, heard customer complaints, and know what the incumbents do not do well. In other words, you have the perfect 'Founder Market Fit'.
The first Hydrogen-powered regional airplane by Universal Hydrogen
- Example: Guess what the CEO of Universal Hydrogen did before starting his business? —> He was the CTO of Airbus 😆
- Network access / Exclusive Partnerships
- To handle production at scale and facilitate rapid expansion into new markets, it is crucial you secure production partners ahead of others.
This is especially true in hardware Climate Tech. By securing deals with the most important regional suppliers, you create a ring of fire around your business 🔥
Example: Biochar production requires Pyrolysis machines. What is the ultimate unfair advantage? —> Secure an exclusive agreement with the ONLY reputable European manufacturer of Pyrolysis machines 🔐
- Future Regulatory development
- You have knowledge of policy makers and can anticipate the potential impact of upcoming reforms. Regulations play a massive role in boosting market adoption. By anticipating these changes, you’re giving yourself a huge headstart.
- Example: In 2016, France banned supermarkets from throwing away unsold items. As a result, Phenix quickly emerged in France and became market leader in Europe in just 3 years 🍅
- Marketing Strategy / Brand defensibility
- Be first in the minds of your customers and develop a sticky brand.
- It's extremely difficult to debunk a well-known and established brand. Having a solid reputation makes it easier to lead.
- Example: Charging $4,000/ton of captured CO2 may seem ridiculous, and their unit economics have received a lot of criticism. However, Climeworks still ranks as the #1 Carbon Capture startup in Europe and receives the most press coverage and investor attention 🤑
- Talent access
- Building a world-class founding team is MISSION CRITICAL. The first ten employees lay the foundation for the next hundred, who then set the standard for the next thousand. Huge talent pools like San Francisco, New York, Boston, and London have been successful in creating success stories.
Example: Commonwealth Fusion Systems secured a 5-year agreement with MIT to support their SPARC reactor programme. This partnership grants them direct access to PhD students, Postdocs, and the abundant resources of one of the world's top Fusion universities 👩🎓🥇
Conclusion
The best startup success stories have mastered all 5: Market Intel, Network, Policy, Brand, Talent.
Luckily you don’t need all of them right off the bat. But if you fail to have at least some degree of unfairness, you will struggle indefinitely.
Make sure to undergo this exercise before entering tunnel-vision mode and starting to build.
It’s not a detour. It’s a REAL shortcut. Trust me. It will make fundraising, hiring and selling much quicker. That’s what separates startups that seem to have an endless positive tailwind 💨 from the rest of the pack that struggle indefinitely and eventually run out of money.
Once you have that unfair advantage, the game will start feeling significantly easier (though still REALLY hard).
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