Comment by derf_
9 days ago
The way to tell if a business has a moat that I once learned was, "If someone gave you a billion dollars, could you go compete with that business and have a reasonable chance of winning." If the answer is yes, then the business has no moat. The numbers are bigger now, but I think the principle remains the same: money cannot be a moat.
A moat is around something that exists, meant to protect it. You're describing something else, not a moat with your example. OP used moat correctly, creative effort around existing earned skill, brand, etc.
To answer your question. Yes to a player already in a market with lack of funding, a billion dolars could be the necessary moat to win.
Money was, is and likely will be a moat for a while. But as a proxy, it may not be enough as a moat. Scarce resources may require more than money— e.g. IP classes or, if you're China, ASML machines.
I think the point is that capital alone is a pretty poor economic moat. If it works, it's probably only because the market opportunity actually isn't that great once you take everything into account. If the opportunity is good enough, the money is out there and your competitive advantage will disappear quickly.
I can't think of a single software company that has a moat then. Good rubric to have and makes sense.
Really? I don't think you could come close to beating any of the major software or AI companies head-to-head with only a billion in capital.
If you gave someone the exact same budgets and resources as the major AI companies, yes I'm sure most humans on this Earth would come up with comparable (and probably even better) plans. Why are we acting as if business magnates have some special quantity in them? Sam Altman isn't an engineer, he's never worked a real job in his life. There's nothing special about him outside of the ability to lie.
If you can hire top talent, why wouldn't you be able to compete on a software level?
What exactly is the moat here?
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