Field Notes FN-001
Notes on Durable Advantage
Why so much of what looks like a moat is really just momentum.
A short note, filed while reading three annual reports back to back.
Momentum and moats look identical on the way up. They diverge violently on the way down. The test is not “is this company winning?” but “what happens to its advantage when growth stops?”
A moat you can only see in good times is not a moat. It is weather.
Three quick distinctions worth keeping:
- Scale lowers cost. It is rarely, by itself, defensible.
- Switching costs raise the price of leaving. Often underrated.
- Counter-positioning makes the incumbent’s strength a liability. Rare, and the most durable of the three.
More to come as the pattern sharpens.