Codie Sanchez breaks down the MOAT model: Margins (50% gross, 15% net), Operations (low capex, productizable), Advantage (defensible edge), and Total Addressable Market. Score each 0-10. Under 10, flee. 10-20, fix it. 30 plus, fund and scale.
Chapters
The best business consultants aren't just guessing if a business is going to work or not. They have a formula that tells them. 4 things and a ranking system that will tell you every single time. I call it the MOAT model. Margins, operations, advantage, TAM. Margins. We want to aim for a gross margin of 50% and a net margin of 15%. Operations. That means we're looking for low CapEx. Can we turn services into productized services? Advantage. What is your edge? Do you have IP, network, a ton of employees? Apple's ecosystem. Then finally, we've got TAM, Total Addressable Market, and this means how big is the market size. Then here's the fun part. You rank them. We could have at the best something worth 40 points, at the worst, 0. Let's say your business scores a 0 to 10. That means flee it. Bad business model, bad business. If your business hits 10 or 20, this means you need to fix it. And if it's 30 plus, that means you fund it. Comment your business and I will rank your business by Moat.