Also known as: competitive moat, economic moat

Moat

ConceptualStrategies

Definition

Moat: A moat is a sustainable competitive advantage that protects a business from competition. Moats can come from network effects, switching costs, brand, economies of scale, or proprietary technology. Strong moats lead to pricing power and defensible market positions.

Example Usage

“Our moat is the network effect—each new user makes the platform more valuable for everyone.”

Common Misconceptions

Being first is a moat. First-mover advantage is often overrated without other moats.

Technology alone is a moat. Technology can be replicated; distribution and data are stronger moats.

Moats are built overnight. They develop over time through compounding advantages.

Origin: Term popularized by Warren Buffett

Related Terms

Network Effects

Network effects occur when a product becomes more valuable as more people use it. Direct network effects mean users benefit from other users (social n...

TechnicalStrategiesProduct