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Originally Posted by Ankesh
In my mind, I have 2 definitions.
1. Toll position. A place that you create for yourself in the middle of a lucrative field so that everyone who wants to be a part of the field has to pay you a cut. Dan Kennedy does that with his info products (from what I know, Dave Dee sold more Dan Kennedy products than Dan Kennedy himself - at least that was true a few years back) and consulting (he gets royalty / commission on good performance).
2. The moat. As Warren Buffet says. Create a moat around your product or company so that others can't compete with you.
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Hi Ankesh,
Thanks for this... I'll have to ponder this...
I do think there is a relationship between "toll positions" and what economists call "barriers to entry"...
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I think a lot of Don Alm type ideas are toll positions because no restaurant or hotel will spare adspace for 2 guys. But they may not necessarily be deep moats unless you employ legal contracts to keep things exclusive.
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I agree with your point here...
That was partly my point in an earlier post, see the P.S. here...
http://www.sowpub.com/forum/showthread.php?p=35260
How easy it is to set up such a multi-year contract, I don't know... Without a contract, I don't see what's stopping someone from coming in and giving the restaurant or hotel a "better deal"...
Of course, the likelihood of that happening may be small. It might also depend where you are - the likelihood is probably smaller in a small town than in a big city...
Best wishes,
Dien