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AmEx was one of Warren Buffet's earlier investments, and a proof-of-concept of investing in companies with defensible moats. This ruling comes 55 years after h

AmEx was one of Warren Buffet's earlier investments, and a proof-of-concept of investing in companies with defensible moats. This ruling comes 55 years after his initial investment, and the moat feels as deep as ever. Later businesses have perfected the art of winning the customer relationship and solidifying their lead with hardball terms for vendors (Walmart), merchants (Amazon), advertisers (Facebook/Google), developers (Apple/Google) and contractors (Uber).

randomsearch 8y ago
Very interesting quote from Musk: “saying you like moats is another way of saying you like oligopolies”. I like Musk’s focus on innovation, and I also thought this was interesting because it came from one of the PayPal+ group.
- bumholio 8y ago
  Investors love them, consumers pay for them and regulators should prevent their abuse. Sounds like oligopolies alright.
- goc_ 8y ago
  It's not a question of liking moats or not. Nobody has found any other routes to scale quickly. The moat is fundamental to producing the kind of scaling we see today.
  - pmontra 8y ago
    But how many moats there could be in world (or in any given market) ? Furthermore which should ask on which side of the moat are we and if it's good for us to be there. There was a post yesterday which fundamentally is about this issue https://news.ycombinator.com/item?id=17642551 https://news.ycombinator.com/item?id=17642551
    - juae 8y ago
      It's a competitive world full of highly ambitious people. As long as the only tool they have to create/expand/defend their empires is moat building that is all they will robotically do irrespective of the cost. The pressure on them to do so is massive. And it's the easiest thing for them to do. So they do it. Ofcourse things constantly collapse. Ask Genghis Khan, the East India Company etc etc And after collapse everyone stands around like Alan Greenspan saying wtf happened?
  - mannykannot 8y ago
    Scaling quickly is not the greater good.
    - CSMastermind 8y ago
      Sometimes it is.
      - pc86 8y ago
        [citation needed]
      - sincerely 8y ago
        For example?
    - deleted 8y ago
      [deleted]
- mikeash 8y ago
  If your only goal is to turn a large amount of money into an even larger amount of money, you ought to love oligopolies.
  - deleted 8y ago
    [deleted]
- bunderbunder 8y ago
  It's not necessarily moats I'm opposed to; it's moats that are created or defended using crony capitalism that I'm opposed to.
- dalbasal 8y ago
  To bring in another PayPal toe-in... Peter Thiel made some waves when he said the whole point of being a business is to create a "monopoly." His definition of "monopoly" is more similar to Buffet's "moat" than the legal definition of "monopoly." There's something very valuable in those guys' intentionally provocative choice of words.
  - dragonwriter 8y ago
    > His definition of "monopoly" is more similar to Buffet's "moat" than the legal definition of "monopoly." There isn't really a difference: the whole point of a Buffet “moat” or a Thiel “monopoly” is avoiding commoditization and competition, which naturally tends to drive sale price down to marginal cost eliminating profits. That is, they are about retaining pricing power. Pricing power is also the key test for the existence of legal monopoly, since the existence of pricing power indicates that there are no actual substitutes in practice, even if there appear to be alternative products in the same descriptive market.
    - dalbasal 8y ago
      It's a test. Honestly though, even the trust-bustiest of onlookers probably wouldn't call everything Buffet considers "moat" a monopoly. I buy fairy dishwashing soap. If the supermarket doesn't have it, I like the supermarket slightly less. If it's 10% more expensive, I still buy it. Home brand dishwashing liquid doesn't have this advantage. That's a moat. It's not really a monopoly though, just a "relationship" with customers.
  - maroonblazer 8y ago
    >There's something very valuable in those guys' intentionally provocative choice of words. This isn't new thinking via Thiel or Musk. Michael Porter detailed this in his "Five Forces" article in 1979. https://en.wikipedia.org/wiki/Porter%27s_five_forces_analysis https://en.wikipedia.org/wiki/Porter%27s_five_forces_analysi...
    - dalbasal 8y ago

randomsearch 8y ago

Very interesting quote from Musk: “saying you like moats is another way of saying you like oligopolies”. I like Musk’s focus on innovation, and I also thought this was interesting because it came from one of the PayPal+ group.

bumholio 8y ago
Investors love them, consumers pay for them and regulators should prevent their abuse. Sounds like oligopolies alright.
goc_ 8y ago
It's not a question of liking moats or not. Nobody has found any other routes to scale quickly. The moat is fundamental to producing the kind of scaling we see today.
- pmontra 8y ago
  But how many moats there could be in world (or in any given market) ? Furthermore which should ask on which side of the moat are we and if it's good for us to be there. There was a post yesterday which fundamentally is about this issue https://news.ycombinator.com/item?id=17642551 https://news.ycombinator.com/item?id=17642551
  - juae 8y ago
    It's a competitive world full of highly ambitious people. As long as the only tool they have to create/expand/defend their empires is moat building that is all they will robotically do irrespective of the cost. The pressure on them to do so is massive. And it's the easiest thing for them to do. So they do it. Ofcourse things constantly collapse. Ask Genghis Khan, the East India Company etc etc And after collapse everyone stands around like Alan Greenspan saying wtf happened?
- mannykannot 8y ago
  Scaling quickly is not the greater good.
  - CSMastermind 8y ago
    Sometimes it is.
    - pc86 8y ago
      [citation needed]
    - sincerely 8y ago
      For example?
  - deleted 8y ago
    [deleted]
mikeash 8y ago
If your only goal is to turn a large amount of money into an even larger amount of money, you ought to love oligopolies.
- deleted 8y ago
  [deleted]
bunderbunder 8y ago
It's not necessarily moats I'm opposed to; it's moats that are created or defended using crony capitalism that I'm opposed to.
dalbasal 8y ago
To bring in another PayPal toe-in... Peter Thiel made some waves when he said the whole point of being a business is to create a "monopoly." His definition of "monopoly" is more similar to Buffet's "moat" than the legal definition of "monopoly." There's something very valuable in those guys' intentionally provocative choice of words.
- dragonwriter 8y ago
  > His definition of "monopoly" is more similar to Buffet's "moat" than the legal definition of "monopoly." There isn't really a difference: the whole point of a Buffet “moat” or a Thiel “monopoly” is avoiding commoditization and competition, which naturally tends to drive sale price down to marginal cost eliminating profits. That is, they are about retaining pricing power. Pricing power is also the key test for the existence of legal monopoly, since the existence of pricing power indicates that there are no actual substitutes in practice, even if there appear to be alternative products in the same descriptive market.
  - dalbasal 8y ago
    It's a test. Honestly though, even the trust-bustiest of onlookers probably wouldn't call everything Buffet considers "moat" a monopoly. I buy fairy dishwashing soap. If the supermarket doesn't have it, I like the supermarket slightly less. If it's 10% more expensive, I still buy it. Home brand dishwashing liquid doesn't have this advantage. That's a moat. It's not really a monopoly though, just a "relationship" with customers.
- maroonblazer 8y ago
  >There's something very valuable in those guys' intentionally provocative choice of words. This isn't new thinking via Thiel or Musk. Michael Porter detailed this in his "Five Forces" article in 1979. https://en.wikipedia.org/wiki/Porter%27s_five_forces_analysis https://en.wikipedia.org/wiki/Porter%27s_five_forces_analysi...
  - dalbasal 8y ago