There are four types of product risk, and each poses a different existential threat to a startup.
At the same time, however, risk also protects startups from competition.
While they’re under the cover of risk, startups can operate more or less freely without digging a moat because everyone’s busy working out the answer to the four risk questions. However, the startup must build a competitive moat before the product is fully de-risked, or it will become a commodity.
For example, everyone has the technical know-how to build Uber, and we know there’s money to be made in building Uber. However, nowadays Uber is protected by immense network effects and economies of scale, making it very hard to replicate successfully.