The New Moat Isn't Your Product

Warren Buffett​ popularized the idea of a moat—the thing that protects a business from competitors, like a castle surrounded by water. Some classic examples of moats include:

• Coca-Cola’s brand loyalty and global distribution
• American Express’s network effects and trust
• Costco’s scale and membership model

For startups and small businesses, the moat has always been the product itself: a superior design, secret formula, or patented invention.

But today, moats have shifted.

Good, original products won't protect you anymore.

Products are easier to copy than ever. What lasts isn’t the product—it’s the system around it.

The Shift in SaaS and Physical Products

During my years at AppSumo, I saw hundreds of similar SaaS products popping up, often within weeks of each other.

Then, with the rapid advancement of AI, it has become even easier to build software in a short time—every product suddenly comes with an AI feature, and that alone is no longer a moat.

The same happens for physical products. Running Wolo, I realized how common good products are, and how quickly they get copied once something gains traction.

In fact, it’s easier than ever to access great products straight from China—factories openly offer catalogs filled with high-quality items, and anyone with some capital and connections can bring them to market within weeks.

So if product isn’t the moat, what is?

Moat #1: Brand

Take Peloton. The bike itself wasn’t special. Any manufacturer could make one. What made them explode was the system around it: the instructors, the live classes, the community of riders pushing each other on leaderboards.

They weren’t selling equipment. They were selling identity and belonging. They are selling the brand.

That resonates with me at ​Wolo Yoga​. A yoga mat is just a mat. Anyone can produce one, and they do.

Our real advantage isn’t in the rubber we use—it’s in building a brand people want to be part of. Partnerships with studios, storytelling that makes people feel proud to own Wolo, and communities that connect around practice.

We’re not fully there yet. We see glimpses of it, but it’s still a work in progress. Building brand and distribution is harder and slower than making a product. But once it compounds, it’s the thing nobody can take from you.

Moat #2: Distribution

At AppSumo, I saw SaaS startups launch every week. Some hit six figures in weeks. But most find their revenue slows down once the launch is over. And some are gone in a few months.

Why? Not because the product was bad. But because the founders had no distribution engine.

This problem became sharper when AI went mainstream. Today, every new tool comes with an AI feature: “AI writing,” “AI scheduling,” “AI analytics.” The product itself isn’t the moat—because the same underlying models are available to everyone.

Even the biggest players know this. OpenAI doesn’t just rely on its models being smarter than Anthropic or Google. Their real moat is distribution:

• The ChatGPT app spreads like wildfire by being the first to capture users' mindshare.
• Their integration with Microsoft, which embedded them into Word, Excel, and Teams.
• Their API partnerships allowed developers to build thousands of applications on top of their platform.

Sam Altman said it plainly: “Distribution is everything.” In today’s software world, he’s not exaggerating. The same applies to businesses selling products.

Moat #3: Operating Efficiency

Then there’s efficiency. The quiet moat that doesn’t look sexy, but compounds over decades.

Amazon’s advantage wasn’t just being the first online bookstore. It was Jeff Bezos reinvesting every margin into logistics—building warehouses, delivery networks, and cloud infrastructure. That efficiency flywheel crushed competitors.

Zara doesn’t win because their clothes are better. They win because they turned fashion into a feedback system. From sketch to store in two weeks. They listen, produce, adjust, repeat—faster than anyone else.

Toyota changed the auto industry with the Toyota Production System. It wasn’t about making cars cheaper. It was about building ​a culture of continuous improvement​, where every worker could stop the line, fix a problem, and prevent it from happening again. Efficiency became learning—and learning became a moat.

Among the businesses I started and consulting clients I worked with, most don’t fail because the idea was bad. They fail because they can’t adapt quickly enough. They overspend on vanity campaigns. They ignore customer feedback. They move slowly while competitors learn twice as fast.

How to Position Yourself as a Small Business

Here are what I think matter most—and what I’m going to apply to Wolo as well.

1. Stop over-engineering your product

The first step is to stop over-engineering your product. In a world where features can be cloned in days, the pursuit of perfection often means wasting time on things that don’t matter.

Instead of asking “What more can I build?” ask, “What would break if I removed this?” If the answer is nothing, then you’re spending energy on the wrong thing.

Put more focus on what surrounds the product—your customer onboarding, the way your community engages, or the story your brand tells—because these are the layers that give products staying power.

2. Build distribution early

Many founders only think about distribution after launch, but by then it’s often too late. Treat distribution like a core feature.

If you’re building SaaS, start by growing an email list or a waitlist while you code. If you’re in ecommerce, line up partnerships or content collaborations before launch. I’d also recommend exploring channels beyond ads—offline stores, marketplaces, social shopping, and other creative distribution paths.

Because distribution is not just about running ads, it’s about partnerships, storytelling, and owned channels you control.

3. Shorten your feedback loops

Efficiency is not just about saving money—it’s about ​learning faster​.

If a new feature flops, you should know in a week, not a quarter. Run small tests before committing big budgets. Look for behavioral data, not just surveys.

And most importantly, create systems where your team can adapt quickly. The faster you learn, the harder you are to compete with.

4. Play the long game

As ​Naval Ravikant​ said, “Play long-term games with long-term people.”

Moats aren’t built overnight. A brand compounds trust over years of consistency. A distribution system compounds as every customer becomes a channel.

Efficiency compounds as every improvement stacks on the last. If you only think in quarters, you’ll always lose to someone playing in decades.

Think Bigger Beyond The Products

A winning product matters: it solves real customer problems, often in ways competitors haven’t considered. The truth is, the product doesn’t need to be perfect. What customers care about is whether it helps them, not whether it dazzles them with flawless execution.

The real challenge isn’t just finding or inventing the product. It’s building the systems that sustain it.

Distribution ensures people actually see and buy what you’ve made. Operating efficiency ensures you can deliver consistently, improve quickly, and stay profitable as you grow.

A brand? It isn’t just a logo or tagline—it’s the promise that makes people come back, even when competitors copy your features or undercut your price. These are the engines that keep a product alive long after its novelty fades.

So think bigger and ask yourself: If a competitor launches tomorrow with your exact product, what would still keep people with you? That’s your moat.