Moat (Economic Moat)
"Build a defensible competitive advantage that protects your business"
Origin: Warren Buffett (popularized the castle-and-moat metaphor)
The Key Insight
Moats are not permanent fortifications - they're current niche advantages that persist only while the environment remains stable. The better question isn't 'how wide is my moat?' but 'what would have to change for my moat to become irrelevant?'
What People Think
Moats are protective barriers - brand, patents, network effects, switching costs - that keep competitors out and let you maintain pricing power.
The Deeper Truth
In ecology, this is the competitive exclusion principle: two species with identical niches cannot coexist indefinitely - one will outcompete the other. A 'moat' is really niche differentiation strong enough that competitors can't easily occupy the same ecological niche. But biology also shows that niches aren't static - they shift with environmental change, and species that seem unassailable can be displaced when conditions change.
Biological Parallel
The niche concept explains why some species persist for millions of years while others go extinct rapidly. Species with highly specialized niches (koalas eating only eucalyptus) are defended against generalists but vulnerable to environmental change. Generalists (raccoons, crows) are more adaptable but face more competition. The deepest biological 'moats' often come from mutualistic relationships - like mycorrhizal networks that connect forest trees - not just competitive advantages.
Business Application
Moats work differently than people think. Network effects are powerful but can flip (MySpace → Facebook). Brands erode. Patents expire. The most durable moats often involve ecosystem lock-in (AWS's interconnected services), accumulated data advantages (Google's search quality), or embedded workflows (Salesforce in enterprise sales). The question isn't just 'what's my moat?' but 'what could change my competitive environment?'
When It Breaks Down
Moats fail when: (1) the environment changes and the niche shifts, (2) a competitor finds an adjacent niche that expands to overlap yours, (3) a technological discontinuity makes the moat irrelevant, or (4) the moat was always narrower than assumed. Kodak had massive moats in film - which became worthless in digital. Blockbuster had retail locations - which became a liability.