Moat
A durable competitive advantage that protects a business from competitors.
Definition
A moat (economic moat) is a structural competitive advantage that makes it difficult for competitors to erode a company's market position. Common sources of moats include network effects (more users → more value), switching costs (costly to leave), cost advantages (cheaper to produce), proprietary technology or data, and brand or regulatory protection. Warren Buffett popularized the term to describe businesses that can sustain returns on capital over decades.
Why It Matters
Moats determine whether a business can sustain profitability as it grows and competitors emerge. A great product without a moat is a temporary advantage — well-funded competitors can replicate features quickly. Building moats — especially data and network effects — should be an intentional design decision from early on.
Example
Salesforce's moat is a combination of high switching costs (deeply embedded in customers' processes) and a massive partner ecosystem.