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Technology Startups

Focus on the Key Points of Leverage

By | Building the Business, Technology Startups | No Comments

“Give me a lever long enough and a fulcrum on which to place it, and I shall move the world.” –Archimedes

Any company trying to achieve massive scale needs to find their “lever.”  Think about your leverage as your unfair advantage, or something that only your company can wield to its advantage. Your job is to identify the leverage, protect that leverage as much as possible (e.g., patents, trade secrets, etc.), then exploit it to achieve sustainable, explosive growth.

As a resource-constrained startup, you can’t tackle everything at once. You can’t vertically integrate 100% if your product, and even if you could it wouldn’t make sense to try. Instead, identify the key points of leverage in your business where you can get an damn-near-impossible-to-copy competitive advantage. Then, make sure you OWN that advantage. Focus ALL of your efforts and resources on achieving and maintaining that advantage. This is the essence of a sustainable competitive advantage, and if you can do this it will be very difficult (if not impossible) to compete with you.

Without some kind of leverage in your business, fending off the competition will be impossible. The moment another talented team of entrepreneurs and engineers sees the potential of your innovation, they will be quick to steal it.

There are many kinds of leverage that you can exploit in the world of startups.  Most of the time, the leverage comes from a significant technical advancement. Any technology that’s significantly better/faster/cheaper gives you leverage. By definition, a cutting edge technology-based startup will have leverage over the competition.  This technology might allow you to profitably price your products below competitors’ costs. Another way leverage can come into the picture is through your business model. Any aspect of your business model, from distribution to revenue model can reveal significant points of leverage. Tesla’s core competitive advantage comes from its highly differentiated centralized OS architecture is so counter to conventional car manufacturing that it would be impossible for incumbents copy.