🛡️The Fallacy of "Defensibility"

The word of the moment because all software is dead, right?

Having spent a lot of time talking with VCs recently, I’ve noticed the same talk track being repeated constantly. “Why can’t this just be done with Claude?” “What makes this defensible?” “What stops OpenAI from building this?” “Why won’t this get commoditized?”

Defensibility is obviously not a new concept, and there are absolutely businesses that develop incredibly strong moats over time. But the way people discuss it today often feels disconnected from how great companies are actually built.

The argument about moat and defensibility for 9.9 out of 10 early-stage startups is ridiculous because almost no company starts with a moat. Most great businesses grow into defensible positions.

They build a product customers genuinely love. They develop strong relationships. They recruit exceptional people. They establish distribution. They raise capital. They create trust in a market. They build a brand. They execute with urgency for years while competitors slow down.

Then one day people look at the company and say, “Wow, what a great, defensible business.” But the moat was built through execution. It was developed over time.

Take Ramp as an example. Ramp did not enter some untouched category with magical structural advantages. Corporate cards already existed. Expense management already existed. Procurement and finance software were already massive markets filled with incumbents and well-funded startups.

If you looked at the category purely through the lens of market saturation, you could have easily convinced yourself there was no opportunity there. Yet the reality was that finance teams were deeply frustrated with the software they used every day. Workflows were manual, visibility into spending was poor, and most products felt bloated and outdated.

Ramp won because they built better software and executed relentlessly. Over time, they expanded into adjacent workflows, built deeper customer trust, improved their distribution and created an increasingly powerful brand.

That company looks highly defensible today, but it certainly did not start that way.

The same pattern exists across modern technology. Stripe did not invent payments. Toast did not invent restaurant software. Datadog did not invent infrastructure monitoring.

These companies entered crowded arenas and simply executed at an extremely high level for a very long period of time.

That matters because there is a tendency right now to overestimate the importance of the initial idea and underestimate the importance of the organization behind it. In reality, durable companies are often built in markets where demand already exists and buyers are already spending money. The hard part is not discovering some untouched market. The hard part is building an organization capable of learning and improving faster than everyone else.

And that is where culture matters enormously.

Not culture in the performative startup sense, but real operational culture. High standards. Speed. Accountability. Intensity. Customer obsession. Great hiring. Clear communication. The ability to adapt quickly as markets evolve…basically, people who “give a shit.”

Because strategy eventually gets copied. Features get copied even faster. Models and infrastructure are becoming commoditized at a pace we have never seen before.

What remains difficult to replicate is a team that consistently executes at a high level over many years. The day a company stops doing that is the day someone else starts catching up.

That’s why I increasingly believe the obsession with defensibility in the earliest stages of company building misses the point. Most startups are not going to win because they discovered some perfectly protected market opportunity. They are going to win because they built a better organization and operating model than their competitors.

Culture eats strategy has become a cliché at this point, but clichés usually exist because there is truth underneath them. Durable companies can absolutely be built in crowded arenas.

In fact, most of them are…