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Capital Efficiency & Entry Barriers

January 8th, 2010 Leave a comment Go to comments
North Face parody brand emblematic of vulnerability of Brand.

North Face parody brand emblematic of vulnerability of Brand.

I love this underdog story line. Big corporate North Face sues college freshman owned parody brand, The South Butt; college freshman then outmaneuvers big corporate with savvy online guerrilla marketing (USA Today article, South Butt legal response). In addition to the obvious lessons about not giving free marketing fodder to your competition, I think there is a case study here that is instructive for those thinking about starting new businesses where “Brand” is the planned primary barrier to entry. Two thoughts:

1. Good for you for even thinking about barriers to entry at the outset!

2. Brand is the one of the weakest of the classic entry barriers, and Capital Efficiency weakens it further, because it lowers the bar for competitors to come after you (heck, a college freshman has put The North Face into defensive mode!)

I can’t wait for someone to bring the Apple parody brand to market. Higher quality hardware at half the price!