What is barriers to entry?

Barriers to entry are the obstacles that make it expensive or slow for new competitors to enter a market: capital requirements, regulation and licensing, proprietary technology, brand trust, distribution lock-ups, network effects, and customers’ switching costs. High barriers protect incumbents’ margins; low barriers invite a steady stream of new rivals.

Software has famously low formal barriers — anyone can ship an app — which is why durable software businesses build their own: data accumulated over time, integrations, workflow lock-in, community. When sizing up a market, ask what stops the next entrant; when defending one, ask which barrier you are actually building.