Moat

A durable competitive advantage that helps protect a business from rivals.

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Business & Work

In plain English

A moat helps a company keep its position when competitors try to win its customers. It might come from a trusted brand or distribution relationships that are difficult to recreate. The important question is how hard that advantage is to copy or overcome, and how long it can last.

Example

A startup has long-term distribution relationships that give it access to customers competitors struggle to reach. If those relationships sustain its competitive advantage, they could form part of its moat.

Sources

  1. Berkshire Hathaway: Chairman's Letter — 1993