Readwise is a service I use to export my Kindle highlights to my note-taking apps. I then use the highlights in my writing.
Readwise also lets you review highlights as if they were flashcards, with a daily review and app. For me, this functionality is secondary to exporting highlights, but Readwise seems to push it as the primary functionality. More on this later.
I want to explore the question:
Imagine a year or two from now, there is an army of Readwise competitors that do what Readwise does for cheaper. What protects their business?
I had a related question while working on Quickapply, and I wrote about it a bit:
On the one hand, you don’t need to be a Zero to One style monopoly to build a healthy small business. I could ignore this competitor, and proceed as if this free alternative to my service didn’t exist.
(e.g. Buffer sells a paid solution in a market full of free alternatives, and they do great.)
On the other hand, the reality is that if you’re in a market closer to perfect competition, you can’t charge the prices you want super comfortably.
There are three points that come to mind for me, as to what Readwise can do / is doing to fend off competitors.
Brand / influencer support
Readwise has a strong brand. Even if there is a free alternative in some years, I might not switch.
- I know big names use Readwise. I, like many others, learned about Readwise through Nat Eliason's blog, and writer Twitter more broadly.
- I like the design.
- I like the founders, through what I've read on their blog.
Buffer also has a strong brand. It's a social media post scheduling app, which are a dime a dozen. But it still makes $20M in revenue. They have a brand around sharing their financials openly, and generally have strong content marketing.
Brand can fend off competitors, it looks like.
Readwise's highlight review functionality generates data that can serve as a moat.
As part of highlight review, users tag and favorite highlights. They also mess with their review settings, to review certain books more than others, etc. This generates data that keeps people from switching to say, a different highlight review service.
Users also form streaks, if they do their daily review for multiple days in a row.
Readwise is leaning into this. If you look at their changelog, you'll see:
- Themed Reviews — Create custom reviews based on "themed" subsets of your highlights
- Precision Frequencies — Control precisely when your Daily Review and/or Themed Reviews are delivered
- Stats & Notifications — Track all kinds of reading & review stats and recover streaks
All of these generate data / stickiness. Yeah, it's a light data moat, but it's a moat nonetheless.
We want our products to be more than just "tool" products (yeah I'm throwing shade at my past product). Those are easily commoditized. You want users to generate data and be engaged.
At the end of the day, companies copy each other's features. The most infamous example might be Instagram copying Snapchat's Stories feature. I also think of Asana/Jira copying Trello's Kanban board concept. You have to keep moving and out-innovate in a new way. Create a new Blue Ocean market.
Something to think about here: How long would it take for a competitor to catch up to you? How long would it take for them to copy your pivotal features? This is your runway.
Anyway, just having some fun analyzing a product I like a lot. Though I'm on a physical book kick of late, and get less benefit out of Readwise.
One thing. I noticed in Readwise's changelog, they said:
I am so curious... what is this "Something Big"? Do you have a guess? Leave some thoughts in the comments below :)