A business moat is a key competitive advantage that sets a company apart from its competitors. From Amazon and Tesla to Starbucks and Coinbase, here is how 25 of the world's biggest companies have built and defended their moats.
Among several shared characteristics, these companies thrive by understanding, building, and strengthening their business moats — the key competitive advantages that set them apart.
Companies can build moats by strengthening their brands, achieving economies of scale, or even lobbying for special status from the government. In return, they can receive customer loyalty, pricing power, and legal protections that make it difficult for other companies to compete with them.
Today, the most durable moats are being built on advantages like network effects, data, and repeat engagement within a product ecosystem.
Google, for example, started its moat by developing a better algorithm for indexing and searching the internet. The company has since strengthened that moat by putting that advantage to work in transportation, shopping, and most importantly, advertising.
In this report, we look into 25 business moat examples and dive into how they work.
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Table of contents
- Network Effects
- Marketplace: The virtuous circle that made Amazon an $850B business
- Marketplace: How OpenTable created a monopoly by giving restaurants a ‘single-player mode’
- Marketplace: How Uber dominated ride-sharing by owning supply and demand
- Marketplace: How Airbnb‘s massive network of hosts and guests makes it hard to ignore
- Data: How Google used its search expertise to build a wide data moat
- Platform: The OS that made Apple a $1T company
- Platform: How Facebook’s control of the social graph made it hyper-durable
- Platform: How treating EVs as a two-sided platform helps Tesla maintain a wide moat
- Cost Moats
- Switching cost: How IBM used the psychology of fear to own back-end technology for decades
- Switching cost: Why ADP is still America’s biggest provider of payroll services
- Switching cost: How Slack retains users by being an “enterprise social network”
- Sunk cost: The business model that made Gillette a $57B company
- Cost advantage: Why GEICO going D2C made them Warren Buffett’s favorite stock
- Cost advantage: How Amazon Web Services built an impenetrable economy of scale
- Cost advantage: How Walmart has kept prices low by taking power away from individual stores
- Cultural Moats
- Brand: How Patagonia grew by understanding its customer identity
- Brand: Why consistency has been key to Coca-Cola‘s success
- Brand: How Starbucks altered Americans’ relationship with their coffee
- Tradition: How Marmite became condiment king in the UK
- Resource Moats
- IP: How Pfizer turned Lipitor into the best-selling drug in the world
- IP: The universe of characters that made Disney a $230B company
- IP: How Qualcomm uses 130,000 patents to generate billions in revenue
- Knowledge: How Canon turned its technical expertise into a compounding benefit
- Regulatory: How the Kingsbury Commitment gave AT&T a 71-year monopoly
- Regulatory: How years of regulatory and compliance efforts are paying off for Coinbase