How to tell if a startup has a moat
AI Summary
Dan Hockenmaier presents a framework for assessing whether a startup has a durable moat. He argues that only four compounding advantages really matter—switching costs, network effects, scale economies, and data effects—while speed, distribution, and brand are only fuel. The recommended process is a three-step evaluation: identify a compounding advantage, gauge its potential strength, and measure whether it's working.
Key Facts
Author Takes
Common so-called moats (speed, distribution, brand)
These are fuel, not compounding advantages—they won't keep competitors away long-term and a startup must eventually build something more durable.
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