Ep 535 | What’s Your Edge and Are You Protecting It?

Thank you for joining me today. It's Brian Gubernick, and welcome to the No Days Off podcast, where we believe that every single day brings a new opportunity to get better. Here's today's big question: what's the one thing that separates businesses that last from those that fade? I think the answer to that question is your edge. What's your edge and what are you doing to protect it? Maybe said a different way, what's your business's moat? If you don't know or, or you haven't thought about it in a while, you might be building something impressive, but it also might be very vulnerable. So let's, let's break down this concept a bit. So the term moat— you probably heard "what's your moat" before. The term moat comes from, as you probably know, medieval castles. A moat was this, this deep kind of wide ditch usually filled with water that surrounded the castle, and its purpose was to keep enemies out. So the idea was pretty simple: make it hard for your attackers to to get whatever was valuable inside. Now, in business, your moat is whatever protects your company from being easily copied or undercut or just simply outperformed by your competitors. It's the defense system around your edge, your edge being your unique value, whatever your special sauce happens to be. I think Warren Buffett really popularized the term in business circles because he was— he's always said, and he continues to say, he's looking for companies that have economic moats, which what he's referring to is just sustainable competitive advantages that can hold up over a very long period of time. Why does this matter? I think it really matters, especially today, because the world is full of a lot of followers, and those followers are actually able to replicate things at historic paces right now. So if your edge isn't protected, it's going to be duplicated, or it's going to be outdone by a company or someone that's hungrier, faster, maybe even cheaper. So I think there's a couple things we could reflect on and helping us kind of determine what's our edge, what's our moat. First, I want you to ask yourself, what are we best in the world at? What is our company best in the world at? What makes us different in a way that actually matters to our customers? What would people miss? What would customers miss if we disappeared? So, what are you best in the world at? What makes you different? In a way that matters to your customers? And what would your customers miss if you were to go away? After you ask yourself those questions, I'd probably then ask, what's stopping someone else from doing it better or doing it cheaper? How hard would it be for our competition to replicate what we do tomorrow? And then lastly, are we actively investing in deepening our moat or, or just defending yesterday's position. I think having a moat is, is about playing not just defense but also offense and doing that at the same time, because you're not just trying to build value. In my opinion, you're, you're aiming to make it hard to steal that value. I think the best business owners are always on the offensive, but they're also playing defense at that same time. They're not just building value, they're not just making breakthroughs and, and creating innovation and things of that nature, but they're also making certain that it's difficult to replicate or steal that value. I think there's some really good examples we can look at in, in the business world, and I, I'm going to focus on maybe some less known, lesser-known companies, certainly still known But I don't want to always default to the Apples and the Amazons of the world. So I'm going to give you some examples and talk through them as real-life examples of moats. Uh, there's a company called Oatly, O-A-T-L-Y. It's an oat milk brand. What's their edge? Well, they were the first mover in oat milk, and they have a pretty bold, uh, brand and brand voice. Their moat is that they control their supply chain. They control their supply chain. They've got incredible brand loyalty, and they've actually done a great job with legal and trademark-related protections around certain things, specifically the phrase "Wow No Cow." That is a phrase that they've trademarked, "Wow No Cow." The lesson here is that they didn't just create oat milk, they created an entire category And frankly, in my opinion, they created a movement. I think it's a good example. I think another example, one that shows up, this company shows up in my house quite often right now, it's called Glossier. It is a beauty and skincare company. And if you know me, you know I have a couple daughters and a wife who are very fond of a number of different beauty products. This Glossier brand, I learned, when I was traveling New York City with my oldest kid, she insisted we go to this store and she knew every product. I was shocked. But The Edge, not surprisingly, this company's built a tribe. And believe it or not, they built a tribe before they even built a product. The moat that they created was this community feedback loop. Their customers actually feel like co-creators. That's a really difficult loyalty to replicate. So the lesson here with Glossier is their moat isn't product or price, it's actually a feeling of belonging. That's a really tough one to replicate. Certainly a more popular company here, how about Chick-fil-A? Chick-fil-A's edge: fast food with elite service. What's their moat? They've got a pretty unique franchise model. They actually vet their operators of their franchises more strictly than a lot of Ivy League colleges. You can't just throw money in and, and pick up a Chick-fil-A. It's, it's darn near impossible. They scale culture, not just chicken. If you know anything about Chick-fil-A, it's got a unique culture. It has this pride in its service, elite service, and its franchise model is, is very much its moat because of who they allow in. Another company many of you may be familiar with, but some others may not, I've been exposed to it. Traeger, Traeger Grills. Their edge is that they brought wood pellet grilling to the masses. The Moat, they have an app, app-based recipes. They also have great storytelling and they have a tribe themselves. They have this loyal outdoor cooking tribe. They made a community out of what used to just be a product for years and years and years. This grill was just a product, but now there's a grilling community. I think those are some really, really good examples. There's probably lots of other ones you have in your mind, but I think the takeaway here is if your edge is what sets you apart, your moat is what keeps others from closing the gap. And in a competitive world, it's not enough to be great. You have to be hard to copy. That's what lets you stay great. So my question for our No Days Off Nation What's your moat? And more importantly, what are you doing to deepen it? I think that's something we all should be contemplating, and we should contemplate it regularly. This isn't a one-time conversation. This isn't simply, you know, sometimes I say put it up on the whiteboard, stare at it for a while, and, and, and then, you know, that's, that's a good, you know, good repetition. No, this is a regular recurring question I think you got to be asking yourself and doing this exercise regularly. That's all I have for you today, the No Days Off Podcast. Thank you so much for listening, and remember, every single day brings a new opportunity to get better. So let's get after it.