We invest in young companies that are creating or redefining emerging industries. It'll need it. Not everyone agrees whether memory chip designer Rambus is a true Rule Breaker. The center of the debate is whether Rambus has a sustainable advantage gained through business momentum, inept competition, patents, or visionary leadership. Yes, but only if you accept that an IP company, which doesn't make the products containing its technology, can have a sustainable advantage, and that Rambus' patent defense won't drive customers to technology beyond Rambus' patent moat.
Sustainable advantage can come in four important ways.
Yesterday's column covered business momentum and inept competition. Today's serves up patents and visionary leadership. Patents vs. production To some, Rambus is a company that doesn't make anything. Some say that an IP company is at the mercy of third-party manufacturers, certain to wait on the sidelines, too timid to invest in the technology until they hear Wagnerian choruses of customer demand. And, even if they ramp up production, third parties are free to be inefficient or inept, while the IP company is helpless.