Accumulating advantages

I read a fun post about building moats in business, moats being a term Warren Buffet uses to describe business advantages that create distance between you and competitors.

The trap businesses fall into is one-upmanship. You add a product feature, your competitor adds one. Repeat until you reach feature parity.

Your competitor increases their budget for bidding on Google Ads resulting in you losing traffic on those product types. You increase your budget doing Google Ads. Repeat until you’re both priced out of ads being profitable.

So the idea of building a competitive advantage, of creating distance in a way that doesn’t just lead to a race to commoditization of everyone being and doing the same things, is really appealing to me.

With experts, that reactive instinct is even worse because resources are more limited. You can’t throw devs at a new feature every week and you can’t light money on fire with Google Ads.

In addition, typically experts reactions are a lot less direct. They misidentify the move being made.

Someone else does a lot of things and as a result of having the right mix or hitting a couple home runs, ends up getting more traffic than you.

You see that their website is laid out a certain way, so you decide to lay your website out that way.

They’re successful. You can see some superficial differences, so you try to account for those items. In a perfect world this is relatively harmless.

But in reality, reaction as a habit over time results in commoditization.

Changing the way your website looks, or launching products with formulaic email sequences, or using marketing language you see common to your industry, or trying to be more like someone else. Those things are the opposite of building a moat.