312. How competitive advantage changed in the age of AI

If building products isn't your competitive advantage anymore, then what is?

Listen to this episode to find out.

AI means that everyone can now build (and everyone can copy).

So to succeed today, you need something un-copyable.

Listen to this episode to learn:

• Why speed to build is now the entry ticket, not the prize
• What genuinely cannot be copied with AI — and why that is where your real advantage lives
• Real examples of companies that won not because of their technology, but because of what they had that nobody else could replicate
• What this means if you are a founder with none of those assets yet
• Why large organisations have the most uncopyable advantages — and why they are the slowest to use them

This episode is for you if:

• You are building a product and want to understand what will actually protect it
• You are a corporate leader trying to figure out where your real innovation opportunity lies
• You are a founder who needs to think beyond the product itself

Book a free consulting session with Sophia: https://calendly.com/sophia-matveeva/new-meeting-1

Timestamps: 

• 00:00 – Why AI has killed the old competitive advantage
• 02:20 – Preview: lessons from Sophia's corporate AI workshop
• 04:40 – The real threat AI poses to your business
• 06:58 – Nike Run Club: how brand beats better tech
• 09:19 – Bloomberg Terminal and Peloton: data and community as moats
• 11:43 – 5 uncopyable assets every business needs
• 14:01 – Why big companies innovate too slowly
• 16:28 – How founders build brand and distribution from zero

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Transcript: 

Sophia Matveeva:  [00:00] A startup with five people can now build a working prototype over a weekend, almost for free. Which means, if your competitors can do the same thing, what exactly are you protecting? The barrier to building has collapsed, and that changes everything about what competitive advantage actually means now.

Welcome to Tech for Non-Techies. This is a podcast for business leaders and non-technical founders building the future in the age of AI. Whether you've been in business for a hundred-plus years and you're looking to modernize, or whether you're building something new, this is the show for you. You'll learn how to come up with new ideas and make them come to life, no matter the size of your organization. I've taught tech and innovation at Oxford University, advise companies like Microsoft, and written for the Harvard Business Review. You're going to hear the frameworks and the thinking that I've built, tested, and taught at the highest level. And now it's your turn. Let's get started.

Hello, smart people. How are you today? I'm in a different room, for those of you who are watching — on radio. I'm in a different room to usual because my baby has taken over my office. And he is seven kilos — he weighs seven kilos, and he is somehow dominating a four-bedroom house. How does that happen?

Anyway, I have a bit of a cold today, and it's the middle of summer, which I feel is just really unfair. I feel like it's not supposed to happen. So I spent half a day yesterday lying in bed, eating baked goods, and watching a streaming service. And you know what? It helped. Although I did feel really guilty lying in semi-darkness when it was a glorious sunny day outside, and my nanny was out in the garden with my baby and my cat, and I was like some underworld creature lying in a dark cave, munching.

Anyway, I think we high-achieving people put pressure on ourselves to work and to get results, which is — okay, obvious. But we also put pressure on ourselves to enjoy ourselves, which is less obvious. So, yesterday I was thinking: it's a sunny July day, and if you're not working, you must be happily frolicking in the sun, and if you're not, then you're wasting the day. And this actually sounds ridiculous when you say it out loud — like, you must go and be happy, you must go and frolic. But sometimes you don't want to frolic.

[02:20] Sometimes you want to lie in a dark room with a plate full of pastries and watch some dumb stuff, basically. And I think now my brain actually feels revived and recovered, so it was exactly what I needed.

So today I want to share some key insights with you, and these insights come from a corporate workshop that I'm going to be teaching next week. This episode is going to be full of super useful points that you can basically just remember and say at work today — and then look like a very deep and innovative thinker. So, you're welcome.

And by the way, if you are finding this content really useful, then please leave the show a rating and a review, because I often feel like I'm speaking into the void, and I'm wondering — who is there? Who am I speaking to? This is why I've loved doing the sample consulting sessions — I get to know you, and then it feels more like a two-way conversation. So, book a sample consulting session. And if you haven't yet, leave this show a rating and a review, so I know that we're together.

Anyway, so the workshop I'm teaching next week is called "Innovation in the Age of AI: What's Changed, What It Means for You, and for Your Competitors." Interesting, right? So the basic premise is this: until fairly recently, it cost a lot of money to test an idea and bring it to market. And with AI, that has changed. As you've heard me talk about many times on this show, you can now build a working prototype in a couple of hours and then test it with your target market in literally one afternoon. Then you can hand it over to developers, and they can build out a simple first version much more quickly than before, because they can use Claude Code and a bunch of other AI tools to speed up production. So even on the development side, it's cheaper and quicker.

And this is really good news, for obvious reasons, but it's also a threat — because, well, you'll learn. Most leaders are not sitting with the threat part enough. We're mostly focusing on the opportunity, and that's a good thing — you want to be a positive thinker, you want to focus on the opportunity — but this episode is more about the threat bit.

So here are some questions I want you to think about: if anybody can build a version of your product over a weekend, what does that mean for your business?

[04:40] And this is not a hypothetical question, because your competitors are asking this question right now. What if your competitors could build a version of your product and make a more successful business out of it than you — because they've got better distribution, better customer relationships, and a better brand? That would be very unpleasant. This is also what investors and startup founders are thinking about. So, in other words, the competitive landscape has changed as a result of how quickly and how cheaply we can build new products with AI.

Now you need to have a laser focus on what cannot be copied over a weekend, because this is where your competitive advantage lies. So here's where to look: your customer relationships and the trust that you've built with your customers over the years — that is one of your competitive advantages. Your proprietary data — the information you've accumulated that nobody else has. Your team's specific expertise and institutional knowledge — the first two points were really relevant for corporates; this one is relevant for both corporates and startups. Your brand and reputation — what people believe about you before they even speak to you. This is why reputation and personal brand matter so much, especially if you're the person creating something new. And your distribution — the channels, the audiences, and the partnerships you've already built.

These are your real advantages. The product is now kind of just a proof of concept. So yes, in a way, business has gotten more innovative and, in some ways, easier — but in other ways it's gotten harder. Unfortunately, we're still not at the stage where we get to have our cake and eat it. Unless you are me yesterday, when I literally lay in bed and ate cake. Anyway, I digress.

I'm going to give you three examples of companies that did not have the most innovative technology — that was not their competitive advantage — but they had uncopyable assets. These examples are from before the age of AI, but they're big and famous, so I want you to learn from them, because most of you are going to know about at least a couple of them. And essentially these case studies also apply in the age of AI — you can take a startup, take a new innovative concept, and literally just plug it into these examples, and you'll get the same result.

[06:58] Example number one: Nike and the Nike Run Club app. Nike did not win because they built the best fitness app — apps were not their key thing; their key thing is running shoes. And by the way, if you haven't read Shoe Dog, the memoir by the founder of Nike, I highly recommend it.

So Nike created this run club app, and other apps like that existed — there was Strava, there was MapMyRun, there were a bunch of others. Nike won because they had forty years of brand equity with runners. If you don't know the origin story of Nike, they basically started as a running shoe company when runners weren't really popular. So they had lots of brand equity with runners, and with athletes in general, and a distribution network of millions of loyal customers. They already had this incredible brand. The app technology was available to anybody — but the trust, the brand, the distribution, that wasn't.

Okay, so that's example one. Example two — if you've worked in financial services, you'll be very familiar with this: Bloomberg, the Bloomberg Terminal. I remember I had to use these — they are so ugly, honestly. The Bloomberg Terminal isn't loved because it has the best interface — it's horrific. Bloomberg won because the company spent decades accumulating proprietary financial data that nobody else had. So they weren't the hottest, they were the smartest. The data is the moat; the product is just how you access that moat.

[09:19] Peloton. This is an example I suspect most of you know. Peloton didn't invent the exercise bike — we've all been to gyms and seen exercise bikes before. They also didn't invent streaming videos. They combined both of these things into a very specific brand identity and built a community of loyal customers who were completely obsessed with the individuals — the people who were creating the workouts. I definitely had my Peloton obsession during the pandemic.

So they combined this identity, they combined the instructors, and they built a community of loyal customers who felt they belonged to something, that they were part of something. And when competitors launched cheaper bikes with better screens, Peloton's retention still stayed high — because you can copy the hardware, but you can't copy the cult.

There was — what was her name? You know the one I'm thinking of. She's Latina, she's got her own "wolf pack," and a huge Instagram following. Robin — Robin! I was hugely obsessed with her. She's very inspiring, for those of you who know what I'm talking about. She's got a great Instagram.

Anyway, I know Peloton ran into trouble later, but that wasn't inevitable. For example, if they'd sold during the pandemic, when they were super hyped up, they would have made out like bandits.

So the strategic question all of these examples raise is: if too many companies are optimizing for the thing that used to be hard — building the product — the question is, which of these uncopyable assets do you have, and are you actually using them? And if you don't have them yet, which ones should you be building right now?

I'm going to go through them again so you have them. And by the way, a really smart thing to do would be to go to the webpage for this episode — the link is in the show notes — go to the transcript, and literally just get these bullet points, take them to work, and sound really smart. So, your competitive advantages are: your customer relationships and the trust you've built over the years, your proprietary data, your team's specific expertise and institutional knowledge, your brand and reputation, and your distribution.

So — which ones do you have? Are you using them?

[11:43] If you want to discuss this — if you're not sure, if you're thinking, "I think we're using this, but not that, how could we use some of these assets better?" — or if you're building something from scratch and thinking, "I don't have any of these assets, can you tell me which ones to build first?" — then this is exactly how to use a sample consulting session.

As you might have heard in the last couple of episodes, I am currently doing a coaching program all about reinventing my business, and you're hearing some of the results here — the podcast content change, and so on. As part of this reinvention, one of my tasks is to do lots and lots of sample consulting sessions with people who are already in my audience, already in my orbit. I really want to get to know you. I'm not going to be doing these forever, because it's unsustainable, but right now I'm doing one-on-one free consulting sessions, and my aim is to keep this up over the summer.

These consulting sessions are literally a free way to get my advice, and if you're listening to this podcast, you clearly want to hear my advice. So it's going to be tailored to you, and it's going to focus on my two areas of expertise: product thinking — product thinking and product innovation — and personal brand.

So if what you're hearing in this episode is sparking questions for you, then let's talk. You could be a founder working on a new solution, or scaling up, or in a corporate wondering how to create something new or be seen as an innovator in your field. The sample consulting session with me will be a great way to dig deep into what you want to create and then make a plan to get there.

To book your session, just go to the link in the show notes. I won't be doing these forever, so if you're listening to this and thinking, "This sounds like a really good idea, but let me get home, let me go do something else, and then I'll book it" — the reality is you'll forget, and by the time you want to do it, it's very possible I won't be doing them anymore. So if you're listening to this and you want to book it, just go ahead and do it now.

[14:01] Now let's talk about innovation in the age of AI and how it relates to corporate leaders and founders.

The corporate leader angle is this: large organizations have the most uncopyable assets, because you've got relationships, you've got data, you've got brand — unless you've completely ruined it, which most of you haven't — and you've got distribution. So you've got all of these amazing assets. But large companies prototype the slowest and validate the least. That's where your Achilles' heel is.

In corporates, people love making PowerPoints about innovation and then sharing them with committees. This is literally what McKinsey will come in and charge you lots and lots of money to do. And I'm telling you, this is a great way to waste time and achieve nothing. In a corporate, your opportunity is to combine what a startup does first — innovation, product thinking, testing ideas, and getting them to market quickly — with the assets you already have. If you do these two things, basically, you are unstoppable. That's how you get the big share price spikes and the bonuses. That's the actual innovation opportunity inside a large organization. But it also sounds interesting — so why not do it?

Okay, now let's talk about the founder angle. Early-stage founders have almost none of these uncopyable assets. They usually have the team angle — if they want to start something, they usually have some credibility, and they've done some impressive stuff before. But when it comes to brand, audience, and distribution — sometimes they have proprietary insight, but brand, audience, and distribution, usually not. So that means you need to build them deliberately. As a founder, this is what you have to create: you're not only creating your product, you're also creating your audience, your distribution, and your brand. And these things are as important as building the product.

I often see founders just focus on the product and think, "Well, we'll just build this amazing product, and then good things will happen." And if you don't have a plan, good things never happen, unfortunately. This is why personal brand and product thinking go together. If you want to build something new without massive corporate resources, you have to combine building yourself up as an innovator with building the product — so that you already have a bunch of customers ready to buy and use your thing as soon as you create it.

Okay, so let's sum up what we've learned today. The question is not whether you can build — that is so much easier and cheaper now. The question is: what are you building on top of, and is that foundation something nobody else can replicate? That's your competitive advantage in the age of AI.

[16:28] Now, my dear smart person, tell me — wasn't this interesting? Wasn't this useful? Wasn't this insightful? Yes to all three. And if you agree with me, then please leave this show a rating and a review wherever you get your podcasts. And if you're not yet subscribed, then please subscribe, because honestly, it's just going to carry on getting even better from here — although this is pretty good.

Honestly, when I get your comments, when I get your reviews, it's really meaningful to me and my team to know that you're there on the other side — that you're listening, that you're learning, that you're applying. So ping me from the other side, leave a rating and a review, so I know that you're there, and that we've got a dialogue going, and that I'm not just speaking into the ether. That would be lovely.

And on that note, thank you so much for being with me today. Thank you for listening. And I shall be back in your delightful, smart ears next week. Ciao.