Four assets that create an unfair advantage

Since the first days of the Russian invasion of Ukraine, Starlink has been the backbone of Ukraine's military. The entire front line could collapse if Musk decided to switch it off. Before February this year, Russia had been using Starlink terminals for its drones to guide strikes deep into Ukraine. But then, Ukraine's defense minister appealed directly to Musk. Within days, SpaceX blocked every unauthorized terminal and Russian units reported losing up to 90% of their connectivity. It caused widespread communication blackouts on the front lines, disrupted real-time drone operations, and forced Russian troops to rely on less effective alternatives.

That's what a proprietary-tech moat looks like. One company can flip a switch and take an army's comms with it, and there is nothing to switch to. 

In today's newsletter:

• Unfair advantage is one way to differentiate 

• 4 types of “unfair” assets 

• Other ways to differentiate 

"We have deep expertise” isn't an unfair advantage

I've read that line on maybe four hundred websites. It's what companies reach for when they need to sound different but haven't done the work to be different. 

There are eight ways to differentiate. I broke all of them down in my new article “How to Position a Product.” You can niche by industry, by use case, by persona; or win on a broken-alternatives angle, a different operating model, a sharper methodology, better economics. But one is harder to fake than the rest, because you either have it or you don't: an unfair advantage.

What is an unfair advantage?

An unfair advantage is an asset a competitor can't acquire by trying harder. It's not something they can copy over a weekend with a copywriter. Matching it would take years to build, millions to acquire, or both. In most cases, these advantages come from owning one of four types of assets.

1. Proprietary technology

Take Pivotal. It was known for high-end software consulting, but the asset that made the company worth acquiring wasn't its services. It was the technology it built along the way. Pivotal created Cloud Foundry, a platform used by much of the Fortune 500 to build and run enterprise software, and developed Spring into the most widely used Java framework for enterprise applications. Those proprietary assets are what ultimately led VMware to acquire the company for $2.7 billion.

You're not Pivotal. But you can productize the thing you do. A repeatable process becomes an asset the moment a competitor would have to rebuild it from scratch to match you.

2. Exclusive partnerships

Being the official partner of a platform your buyers trust is borrowed credibility and access to customers. Buyers assume you've met the platform's standards, the platform recommends you to prospects, and you gain early access to product roadmaps, training, and co-marketing opportunities.

But the status of an AWS Premier Partner or a Salesforce ISV takes years of delivery to earn. You don't get it by wanting it more.

Don't confuse exclusive partnerships with badges. The unfair-advantage version is when the platform representative introduces you to their customers during a Zoom call. 

3. A unique dataset

Bloomberg spent decades building financial data nobody else holds. Over 325,000 finance professionals globally lease the system, generating up to $15 billion in recurring annual revenue for Bloomberg. 

The data is an unfair advantage. If you have proprietary algorithms, numbers, benchmarks, or research, that's an asset. And it's exactly why we push clients toward original research. Unique research (even a small one, like the one we did at Zmist & Copy) manufactures this advantage from scratch.

4. Distribution

An owned audience you can launch to for free, while competitors pay to reach the same people, is another unfair advantage.

Before Moz became an SEO software company, Rand Fishkin built one of the internet's most trusted SEO blogs. He started that blog in 2004. Three years later, he launched the SEOMoz Pro Membership subscription product to an existing audience of 10,000 marketers interested in SEO. That audience became his first customers and advocates.

Morning Brew did the same from a dorm room: a free newsletter that grew to millions of readers, then sold a majority stake to Business Insider in 2020 at a ~$75M valuation. 

Today there are many businesses that grew entirely from LinkedIn. Competitors could copy their services or products, but they couldn't copy years of accumulated credibility, relationships, and direct access to buyers.

See you next week

There’s a burger place we love for dinner. It’s an open-air restaurant on a hill with nothing but fields around it. At sunset, the view is breathtaking, with golden grain stretching in every direction and a small medieval town on the horizon.

It’s about a 40-minute drive, which feels a lot with a two-week-old baby. Today my husband said, “Maybe we can find something similar closer to home?”

I laughed. “No chance. That view is the restaurant’s unfair advantage.”

I suspect there are more types of unfair advantages than the four I’ve listed here. If you’ve found one, let me know.

Meanwhile, here are the other ways to differentiate when you don't have an unfair advantage.

Kateryna

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