We do not expect IT enabled services businesses to have strong patent positions that would prevent anyone from entering a market. Instead, we look for defensibility in data.
We would argue that the network effect that makes it difficult to compete with Craigslist or eBay is based on a proprietary data asset. People go to these sites because they have lots of listings. This is a data asset. But it is not their only data asset. The systems for controlling reputation and spam at eBay and Craigslist are also built on a valuable data asset. As these systems accumulate data over time, they increase the value of the service and make it more difficult for newer services to deliver an equivalent experience.
Thursday, August 10, 2006
How one venture capitalist looks at business models
A Venture Captalist points to Union Square Venture’s post on data defensibility:
Posted by Alice at 8/10/2006 11:08:00 AM