I recently read a stock pitch about a small company. One of the critiques it received was that a reader didn’t understand what the business’s moat was. Now, I invest in mainly small to tiny companies. Realistically, none of the companies I invest in have moats. Sure, a few may have first-mover advantages, intellectual property, or some other secret sauce that gives it a competitive edge, but they don’t have full-fledged moats. The best that can be said is that they are in the process of developing moats.
For me moat and competitive advantage is almost same thing... one of the questions I ask before investing into the company is “what is the moat? What is the competitive advantage?” And sometimes the answer can as simple as “ founder is the largest shareholder and has shown to be not afraid to fail forward” just as ONE example , there are usually multiple things as advantages and a lot of them are not the exact definition of Twitter’s MOAT and I do agree with you on that sometimes moat is in the making and sometimes it just doesn’t get made...
I apologize for the broad question. How should a small business owner think about creating a MOAT and, importantly, expanding it day-to-day? What resources do you recommend? Thank you for the thoughtful post.
Good post. Agree with your sentiment, we can regurgitate Buffett quotes all day or we can roll up our sleeves and do some work.
For me moat and competitive advantage is almost same thing... one of the questions I ask before investing into the company is “what is the moat? What is the competitive advantage?” And sometimes the answer can as simple as “ founder is the largest shareholder and has shown to be not afraid to fail forward” just as ONE example , there are usually multiple things as advantages and a lot of them are not the exact definition of Twitter’s MOAT and I do agree with you on that sometimes moat is in the making and sometimes it just doesn’t get made...
I apologize for the broad question. How should a small business owner think about creating a MOAT and, importantly, expanding it day-to-day? What resources do you recommend? Thank you for the thoughtful post.