from Hacker News

MOATs Aren't Useful

by ocean_moist on 11/6/24, 1:58 AM with 4 comments

• by ianburrell on 11/6/24, 2:32 AM

  Why is MOAT capitalized like it is an acronym? It links to article that does the same thing. The supposed acronym is never defined.

  It is the word "moat".

• by readthenotes1 on 11/6/24, 2:36 AM

  I'm not sure why I would take the advice of some random blogger over Warren Buffett.

  https://en.m.wikipedia.org/wiki/Economic_moat

• by dbs on 11/6/24, 9:08 PM

  Moats per se are not useful. The direction is - are they strengthening or fading.

  Also moats should be seen as a consequence of multiple dynamics - industry, management, etc - not as a cause.

  A business that is growing and by growing is reinforcing their moat is a powerful multiplier.

• by mitko on 11/6/24, 2:34 AM

  Defensibility re: companies is well studied, by Hamilton Helmer who and his grad student did case studies of several hundred "defensible" companies and identified 7 "powers" that help companies defend against specific competitors. Note that each power is only applicable towards a specific competitor, and not as a blanket statement. The powers are 1. economies of scale, 2. network effects, 3. counter positioning, 4. Switching costs, 5. Branding, 6. Cornered resource and 7. process power.

  I highly recommend Cedric's writing on the topic (behind a paywall) https://commoncog.com/7-powers-summary/