Moats

Questions

What is Moats?

A moat is a durable competitive advantage that keeps rivals at bay, a term popularized by Warren Buffett. Moats come from network effects, proprietary technology, brand loyalty, switching costs, or cost advantages, and the best ones deepen over time, as with ASML's lead in advanced chipmaking machines.

How do you use Moats?

In your own work, build advantages that are hard to copy: rare expertise, systems clients rely on, and efficient processes that compound. When evaluating a business, ask what protects its profits and whether that protection is widening or shrinking.

When does Moats matter?

Moats is one of the 56 mental models for strategy, the situations where you ask: How do I win when others want the same thing? Within that, it belongs to “Finding your advantage”, alongside Barriers to Entry, Center of Gravity and Economies of Scale.

What is an example of Moats?

Two stories show it at work: The fortress of Buhen (c. 1860 BC) and ASML (2020s). Both are told in full in The Mental Models Daily Almanac, which has two stories for each of its 365 models.

Which mental models are related to Moats?

Switching Costs, Network Effects and Margin of Safety. Moats itself comes from economics.