Startup Power Progression: Eliminate Three, Sequence Four
Cross off the three powers a startup can't have yet, then pursue the remaining four in sequence — counter-positioning first.
- Difficulty
- Advanced
- Time to result
- ~months to results
- Steps
- 3
- Confidence
- 93%
Because certain powers only become available at specific phases of a business's life, a startup can immediately rule three of the seven off the table (branding, process power, cornered resource) and focus on the four that are reachable: counter-positioning, scale economies, switching costs, and network economies. These four are sequenced, and nearly every startup should begin with counter-positioning — the refuge from an incumbent who could otherwise just extend its product to crush you.
Origin
Hamilton Helmer's 'Power Progression' concept from '7 Powers'; the second book he was writing at the time of the interview centers entirely on this sequencing over the business life cycle.
Core principles
- 01Different powers are available at different phases of a business — timing gates which are reachable
- 02Branding and process power only mature in the stability phase, so they're off the table at the start
- 03Cornered resource (e.g. a drug patent) is a distinct, usually obvious class not relevant to most startups
- 04The reachable four are sequenced, not simultaneous
- 05Product-market fit is mostly substitution, which is exactly what counter-positioning defends
How to run it
- 1
Take three powers off the table
Rule out branding and process power (they only develop in a far-out stability phase) and cornered resource (a distinct class — patents, licenses — obvious and rare). A startup cannot manufacture these early.
Pro tip Brand recognition can still matter enormously early — just don't mistake bought awareness for branding power.
Watch out Process power is 'operational excellence on steroids' and is usually imitable — don't bank on it as a startup.
- 2
Start with counter-positioning
Since product-market fit is primarily substitution — satisfying an existing need in a novel, higher-value way — your first competition is the incumbent. Without counter-positioning you're at high risk from an incumbent who already has the capabilities and just extends its product. Counter-positioning is the refuge from that.
Pro tip Think hard and explicitly about whether your business model gives you counter-positioning before anything else.
Watch out Entirely new needs (no incumbent) are rarer than founders assume; assume you're substituting.
- 3
Progress to the scale-dependent three
After counter-positioning, the reachable powers are scale economies, switching costs, and network economies — all of which depend on your scale relative to competitors and emerge as you grow.
Pro tip Read the book for the precise definition of each before deciding which fits your model.
Watch out Don't chase scale/network power before you've secured the counter-positioning that keeps you alive.
In the wild
Helmer notes Amazon came up against brick-and-mortar stores and Google came up against Yahoo — each a novel, higher-value way to meet a more-or-less existing need. That substitution is functional competition against an incumbent, exactly where counter-positioning is the refuge.
→ Illustrates why counter-positioning is the natural first power for a substituting startup.
Common mistakes
Chasing branding or process power as a startup
These powers only mature in a stability phase far out in a company's life; pursuing them early wastes effort on advantages you can't yet hold and that are often imitable anyway.
Skipping counter-positioning
Launching a mere substitute with no counter-positioning leaves you exposed to an incumbent who already has the capabilities and only needs to extend its product to match you.
Is it for you?
Best for
Early-stage founders deciding which competitive advantage to architect into their business model before and around product-market fit.
Not ideal for
Mature, stability-phase businesses where branding, process, and scale powers are already in play — the elimination logic no longer applies.
From the transcript
“there's a thing called Power progression which which says there are it it tells over the cycle of a business there are times when certain…”
“those two were branding and process power”
“so you can take those three off the table and that then leaves counter positioning scale economies uh uh switching costs and network economies and…”
“if you don't have counterposing at that point you're at pretty high risk from an incumbent who already has the capabilities necessary to do that…”
From the episode
Business strategy with Hamilton Helmer (author of 7 Powers)