WHAT’S YOUR BUSINESS MOAT?

Business moats strengthen your position in the market by making it a challenge for other companies to compete. A moat can emerge with the help of communities, a special status, brand power, economies of scale + other variables.  Here are some.

NETWORK EFFECT is a moat that grows with reach. As more people use the product and advocate for it, the value of that product or service increases for both new and existing users.

COMMUNITY SUPPORT is by far one of my favorite moats and I beleive that we’re just starting to see the real value that this moat provides to a startup. As strong community moves a company from being transactional & self-advancing to one based on authentic human interactions. The by-product is mutual value delivery thru a sense of belonging, sharing & networking. As people lose more trust in larger institutions this moat increases in value

BRAND POWER is a moat that inspires loyalty and a sense of shared views/values.  The result is companies and brands that can justify higher costs and often attracts recurring customers / referrals.

EFFICIENT SCALE creates a natural monopoly. This occurs when a company serves a market with limited size / demand so new players don't have an incentive to enter. For example, there's no economic incentive to compete with an existing airport if both will split limited profits.

INTANGIBLE ASSETS raise barriers + help companies benefit economically. Patents, trademarks & copyrights are examples of legal barriers that protect against unauthorized commercial use of products. Brand equity strengthens client loyalty + garner higher prices. Licenses may raise hurdles.

SWITCHING COSTS make it more challenging for others to compete while creating an opportunity for the company to increase prices + grow long-term. Beyond revenue, the price paid to switch can be measured by effort, cost of losing community, time invested + psychological toll.

COST LEADERSHIP is based on cost advantages that undercut competitors by producing & selling goods at lower costs that achieve higher margins. Cost advantages are often gained via economies of scale, lower distribution / manufacturing costs and access to lower-cost resources