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The 'Moat' stage in Andrew Chen's Cold Start Theory signifies the point where a networked product has successfully established its market presence and is now defending its position using network effects. This concept was popularized by Warren Buffett in the context of competitive advantage. For networked products like Slack or Airbnb, their software and functionality can be easily replicated, but the difficulty lies in replicating their established network. This network, therefore, acts as a 'moat' or a barrier to entry for competitors.
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The Moat is the final stage of Chen's Cold Start Theory and is about a successful network that defends its turf with network effects. Warren Buffett popularized the concept of the competitive moat. He argued that to make good investments, one should determine the competitive advantage of a company, and above all, the durability of that advantage. For networked products like Slack or Airbnb, their software and functionality can be replicated fairly easily. Instead it is the difficulty of cloning their network that makes these types of products defensible.
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When a networked product launches, it faces a chicken-and-egg problem: people need to use it for it to be worth anything. So how do you start the very...
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