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3 Moats You Can Build To Protect Your Business From Knockoff Competitors

Winston Ibrahim

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A crucial part of building a successful business is learning how to protect your product.

It’s not enough to just create something customers want. The key is to create something customers want and will continue to want in the future—and, most importantly, continue to want from you and not someone else who offers a similar product or service.

In order to protect your product, it’s important to understand how companies go about “competing” against each other:

  • By price: “We are cheaper.”
  • By accessibility: “We deliver faster.”
  • By perception: “We look better/cooler.”
  • By business model: “We don’t make you pay upfront.”
  • By benefits: “We offer more bells and whistles.”
  • By messaging: “We understand you better.”
  • Etc.

Knowing that competitors will eventually try to “knock off” what it is you’re doing, you want to put up as many barriers as possible as you go along.

Here are the different moats you can build to protect your business.

1. Legal

One of the reasons I felt so ambitious about building my current company, Hydros, was because the product itself lends itself to so many high-quality pieces of intellectual property.

Very early on in the process, we brought legal experts on board to help us understand the ins and outs of patent infringement, and how we could build a robust IP portfolio that would be difficult for even a sophisticated company in the market to take advantage of or copy for themselves. Our product and industry benefit from this type of moat. In other industries, such as the food and beverage industry, it can be harder—and in software, it’s nearly impossible (unless you get into the realm of “trade secrets,” which is a whole other category).

Design patents are another form of legal protection, although the rules aren’t as “clean-cut” as utility patent infringement, and so design patents are harder to enforce. And name infringement or trademark infringement, although they certainly happen, are usually not worth the money or effort to pursue. For example, if a Nail salon was called Hydros, we would have no reason to sue them because a nail salon isn’t siphoning sales from our business—they exist in different industries.

The key to building a successful legal moat is to make sure you have taken the proper steps to protect “the protectable” parts of your business.

2. Branding

The second moat you can build is by integrating your branding and marketing with the category itself.

Companies that create huge marketing moats for themselves are the ones who end up creating or redefining their product’s category. Uber is synonymous with ride-sharing. Amazon is synonymous with eCommerce. Netflix is synonymous with streaming TV and movies. Spotify is synonymous with streaming music. All these companies created or dramatically redefined their product categories to the point where the company itself represents the type of product the customer is looking for. It’s the reason why we say, “I’ll just Google it” instead of saying, “I’ll search for it on the internet using Google.” 

The more your marketing and branding can reinforce the category you are creating or redefining for yourself, the more difficult it will be for another company to be seen as a leader in the market.

3. Execution

In most circumstances, execution is probably the most important moat you can build for your business.

Name is a huge part of the execution puzzle. I know some founders who have paid design firms half a million dollars (or more) just to do naming exercises. Second is the product—and in Silicon Valley, this is borderline religious dogma. “The best product will always win.” Third is price, and how much pricing power you have in your market. And fourth is value, and how meaningful of a solution you’re creating to a meaningful problem in the world.

How well you are able to execute, then, is always a reflection of your team. You could have the best product in the world, but if your team isn’t capable of bringing these “unfair advantages” to life, your business won’t last very long. Furthermore, you could have the right team for a period of time, only for a better team to come along down the road and overthrow your position in the market.

I am the founder and CEO of Hydros, an innovative water filtration startup with proprietary technology that works at five times the speed of standard home filtration systems. We strive to create beautiful, convenient, and competitively priced portable and home filtration products to reduce the consumption of single-use disposable plastic bottles.

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