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Competitive Differentiation

To create value, make something people want but cannot get easily elsewhere.

You can escape being commoditized if you’ve competitive differentiation.

Why it matters: Differentiation allows you capture value for yourself without worrying about others copying you.

  • You could create a lot of value without becoming very valuable yourself.
  • Creating value isn’t enough — you also need to capture some of the value you create. In his book Zero to One, Peter Thiel talks about how the US airline companies serve millions of passengers and create $160 billion of value each year. But they capture very less value themselves.
  • Beware: Rivalries cause us to overemphasize old opportunities and slavishly copy what has worked in the past.

Types: Defensible differentiations are also called moats. There are different types of moats.

Credits: @ganeumann

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