Moats: articulating beyond the buzzword

At Intanify been thinking about moats a lot recently. Our own, of course, as we make strategic choices and present ourselves to investors as we raise our seed. But more importantly, our users, who use our platform to identify and articulate their moats. As I wrote before, a moat, is typically underpinned by intangible assets like data, proprietary code, brand and skills. So how do our users do it? This short article illustrates.

Defining moat

A moat is a sustainable competitive advantage that protects a company from competitors, allowing it to maintain profitability and market share over time. The term, popularised by Warren Buffett, has been developed substantially since and is top-of-mind for investors and entrepreneurs. Probably the best framework is Hamilton Helmer’s 7 Powers. The best companies stack multiple moats.

How to articulate your moat?

Step 1: Start with all your assets

This would include software, brand, data, IP, know-how, processes and skills – every asset that enables your company to compete and earn revenue. Forget what the accountants call assets, we’re focused on the real assets of modern companies.

If you don’t have this list, and many do not, that is step 0. Intanify’s tech can help you here, extracting 25 asset types from your company information with expert-powered knowledge graphs.

Step 2: Map assets to revenue drivers and competitive advantages

A moat, like unique data, will typically be underpinned by multiple components beyond the data itself. For example, proprietary algorithms to create and structure the data, relationships to source it, skills and processes your company has developed to enrich it. Or switching costs would be made up of multiple drivers that make switching unattractive – from lost features to interconnecting relationships.

Mapping your assets to value drivers and competitive advantages will often help here. What do you use to make your business win? Intanify uses our model to do this.

Step 3: Articulate

Our framework comprises four parts (see below)

• Why it’s tough to replicate – a moat isn’t worth the water that fills it if another company can replicate it.

• Why it’s powerful – how it is not easy to overcome and thus market share and profitability are protected.

• How it works – literally explain how your moat keeps competitors out.

• The specific assets that underpin it – making it real.

The result: Compelling and defensible moat

Too much moat description is hand-wavey or naval-gazey. Or management consultant 2x2 matrix-dry. Intanify aims for a presentation to be simple, clear and grounded in the real assets.

We’ve done this for a number of our users, which of course we cannot show. But for a flavour, here is our demo company: