Exclusive Data - Building a Moat

Exclusivity has been something I have always seen in the early alternative data hedge fund days. Getting exclusive access to a dataset. A few firms paying millions of dollars for exclusive access in hopes of keeping the “alpha” all for themselves. In the early years of hedge funds trading on consumer transaction credit and debit card data, firms paid tens of millions for exclusive access. Over the years firms decided it wasn’t worth it or it looked bad from a headline perspective or maybe they would eventually get in trouble with regulatory agencies.

In a world where AI is being democratized and integrated into every company, having proprietary, unique datasets will separate winners from losers. I am meeting more and more intelligent companies striking multi-year deals for exclusive data for specific use cases. Some are for use in specific verticals or industries or for specific types of products. The more I hear about these ideas, the more I think this could be a unique opportunity for startups to create a moat.

Find a unique dataset that isn’t be used or sold into your industry. Strike a long-term, 10-20yr exclusive access to that dataset and then start building. Get a real head start. Get such a large amount of clients and features built, that by the time your exclusivity is up it doesn’t matter.

We have been hearing and reading about for years that “data is the new oil” but I think now more than ever, the winners are the ones who build data moats. If you don’t own the data, then you gotta get creative. Strike long-term exclusive deals and start building!