Eric Siu and Neil Patel argue a moat isn't a static asset but an ongoing capability. They add speed as an eighth power to the 7 Powers framework, showing how Nvidia, Tesla, and others stay ahead by continuously renewing advantages rather than resting on them.
Chapters
So people like to talk about moats, right? You want to say something?
No.
Okay. So people like to talk about moats and moats are defensibility. Like Warren Buffett used to like to talk about moats. Like when you have a castle, you want moats protecting it. So it's not as, you know, it's more defensible, right? And so—
Do you want to describe it in how you're building a castle?
Yeah. Okay. So like you have a water moat around the castle. So like you have the drawbridge that's up. You can't just, you know, you can't just attack the castle and scale it, right? So this is back in the day. Now today, founders, businesses, they like to talk about moats, you know, or if you're trying to raise investment, people are like, oh, like what moat do you have? Like how is this defensible? How come, you know, OpenAI can't just kill you, right? But people have described a moat as what? A noun. But a moat actually, Neil, is a verb. And so Gary Tan said this from YC, it's a verb. So popular belief says startups win because they have one big game-changing insight, but the Windsurf CEO argues that's a myth. Every single insight that we have is a depreciating insight. Okay? So if I tell you this new idea with ChatGPT, it's already depreciating right now. In other words, the value of your insight declines fast. Competitors catch up, markets shift. What was once novel becomes table stakes. So yesterday's amazing was today's average, right? Nvidia as an example, even at trillion-dollar scale and 70% gross margins, they still have to innovate or AMD catches up, right? The real advantage is continuously generating new insights and executing on them. So it's not about the insight you had one year ago, it's whether you can compound that advantage over And so a moat is not a noun, it's a verb. So you have to move very quickly and that speed is actually a moat now. Like people will say, oh, switching costs, that's a moat. Branding is a moat. Your processing power, like Toyota for example, that's a moat. But speed, something that you've always had, speed is a moat, right? And—
It's hard though, 'cause the AI, everything moves so much faster.
It does. Like, okay, even though let's say I read more than you or whatever, you're still, your speed is really quick. You have a different way of learning. You're calling people all the time. You're still pushing ideas through. So we have different ways of pushing through our speed. And remember the AI called me out? It's like, yeah, you're an F1 driver and you just need to build a system that's like an F1 car.
What did it say? It was an F1 driver in a what car?
You're an F1 driver in a Honda Civic right now, right? I was like, oh.
Good cars though, good cars.
Motherfucker. So pardon my language, but, and I shared it with my team too and we're laughing about it because it's like the system will scale, right, over time. And earlier it goes back to how much capacity does your system have, does your team have, right? you right now, like sure, you might have a bunch of ideas, but that is the moat ultimately. Because if you start to slow down, if you start to say, I'm going to get out of these people's way, I'm going to let them do their thing, you think they're going to move as quickly as you are? You think they're going to have the same urgency you're going to have?
So if you had to pick, okay, what do you think the moats are right now? If you had to pick from everything that you've described, what do you think the main moats are that are still remaining?
So this is cheating. There's a great book I read called 7 Powers. And so here are the moats that I remember, okay? Speed actually not included in that book. It should be included, but there's 7, okay? One is brand. So Coca-Cola would be an example.
I agree with that. I think that's actually the only moat left in marketing.
Could be. Then you have another one, switching costs. So you see this, the more services you build in, if you can even do it at 70, 80%, that's still more superior than someone doing one service at 100%, right? So switching costs, process power. I just mentioned Toyota. The reason why everyone's like, why is Toyota so successful? Why is Tesla so successful? manufacturing, their process power. That's argu— I mean, Elon has said arguably the hardest thing was actually the manufacturing piece with Tesla. Okay. Then you also have network effects. So you look at, you look at, you know, Facebook, Instagram or whatever, right? The more people use a network, the more powerful it becomes. And then the other ones, those are 4. Yeah.
So the reason I like marketing, I mean, I like brand and why I believe it's the only moat, whether it's moving fast or whether it's spending money to try to build a network effect or optimizing systems and processes. Some people can figure that out, some people can't. Money may be able to potentially solve something and same with time, but brand is that weird thing where either someone has it or they don't and you try building it and either it works or it doesn't and it doesn't matter how much money you spend.
Yeah.
Peter Thiel talks about this a lot or he's talked about it in the past. I don't know about a lot, It's that weird thing that's really hard to put your finger on and being like, this is the way you create amazing, successful brand.
Yeah.
And it's just like, it's just something that kind of happens.
Yeah.
Or it doesn't. And it has nothing to do with how much money you spend. Because I've seen people spend an arm and a leg and their brand still sucks. And people spend barely anything and people love the brand.
You know, Steve Jobs said this. Steve Jobs says that once you sell to someone, you have a customer. But once they talk about you to other people, you have a brand. Yeah. Yeah. And so let me, let me give you the other one. So we talked about network effects, we talked about switching costs, counterpositioning would be another one, right? So it's like, and I think this is a weak moat actually. Sure, you can counterposition yourself and say, remember when Apple was counterpositioning versus the PC? I don't, I think that's like, that's kind of weak. It doesn't stand on itself that well.
Oh yeah, the ads. I'm a PC.
Yeah.
I'm a Mac.
Yeah. So like, by the way, at that point Apple wasn't as strong as they were like today, right? They were like still coming back and then cornered resource. So like for example, if I have all the uranium in the world, Guess what? I win, right? So building nuclear power.
You see all the natural earth minerals, all the stocks are booming right now because the US and China are trying to buy everything up.
Yeah. Yeah. And they do, by the way, you're going to need like $3.25 trillion to meet all the electricity demands in the next, like, you know, couple of like next decade or so, maybe even a little longer than that. Branding power, we talked about process power, we talked about scale economies too would be another one. But these are kind of the main ones. But I think speed goes into this one. Speed should be one of the 8th power because I do I do believe the reason you've been able to be successful, and even me as well, over time, over long periods of time, like there's no doubt, like we'll get, you know, we'll do fine is my point, right? But it's 'cause of speed and it's 'cause of urgency. And it's hard, like the reason why startups do really well right now is 'cause I remember I talked to that Lindy CEO, he's like, oh yeah, we're 996, we're in the office all the time. I mean, you look at some of these AI companies, they're working there 7 days a week. You can't do that forever, but there's a speed advantage there. Yeah.
Yes, there definitely is a speed advantage. It is harder to be fast when you have a big organization.
And when you're remote.
Yeah, and when you're— and I don't think remote has been too much of an issue for us. What I found is we just create smaller teams and we can get a lot of stuff done and it doesn't matter if we're remote or actually—
Yeah, actually I backtrack too, because with our— I would say the high-performing people that directly report to me, we're just huddling each other all the time. On Slack. So we just call each other directly.
I was like, huddle?
And then like— Yeah, it's basically a phone call. Yeah. Like a team— you do it in Teams, right? Teams call.
Yeah, we do Teams.
Yeah. I mean, not we, but you just call them when you want to call them, don't you? Yeah.
I don't even—
You don't have everyone's phone number.
I have everyone's phone number. I don't, I don't do a Teams call either. I've been on Teams calls, but what I found is what's interesting, 'cause I was with Heathen the other day and we were just talking about Slack, Zoom, and Teams, and even like the Google Meets and stuff like that. He's like, oh, in the Bay everyone uses Zoom.
Yeah.
And then I was like—
Oh, interesting.
And then I was like, really? And I'm like, I find everyone in my world using Teams.
Yeah.
And he's like, really? He's like, no one in the Bay uses Teams. I'm like, well, what I found is most enterprise businesses are on Teams globally.
Yeah.
I don't know too many people who are on Zoom.
Dude, I mean, this is the switching costing with Microsoft. Because they have the distribution there and it's cheaper to just use their thing.
Network effect. Network effect.
Yeah.
And it's cheaper because they give you that shit for free.
Yeah. And brand, you know, they're not going to screw around with your security too, right? So they have multiple ones. Yeah.
And I do think they charge now, but originally when we were on Teams, it was free and we're like, okay. And people complained. They're like, oh, we want this in Zoom and it's so much better. And I'm like, it's free and we're already on Microsoft. Everyone's using it. And I remember our organization, a lot of people hit me up being like, I don't want to switch from Gmail to Outlook.
And this is where you're like, hey, I have no decision here. Even though you do, even though you do.
I had a decision.
Yeah, but you don't want to engage is my point.
Oh, I didn't engage. I just said whatever the executives and you guys decide, you should. Exactly.
But it's your decision.
Well, I didn't care because I'm still on Gmail.
Yeah.
Because my email is neilpatel.com.
It's your cost.
No, no, no, no. So if you email people on our company, it's their name or first initial and last name, whatever it is. Some people have first name like Nick because he was early on.
Yeah.
At like npdigital.com.
On Outlook, right?
It was on Gmail. Eventually they got switched to Outlook. My email has always been neil@neilpatel.com.
I know. Yeah.
So I got to stay on Gmail so their switch does not impact me.
Yeah. But my point is you do care about the cost. Like you say, that's what I'm saying. It is kind of your decision still.
Yeah. And the cost was large enough where I wanted the savings and I was okay with the pain because this sounds bad, but I didn't have to experience the pain because I'm still on Gmail.
I always— this is the thing. I always knew you would never switch on anything. So like I had a sense that even though you guys were switching to Microsoft, I was like, you're not going to change anything.
Yeah. Even Teams, like people send me like this Teams thing. I'm like, I can join Teams calls, but if like they're chatting me on Teams, I'm like, dude, I don't see it. I'm like, you need me, just call me.
Speaking of calls, okay, so I got— here's a good one. So if you're in B2B, here's the deal. LinkedIn account-based marketing sucks, but it doesn't have to with Carrot. It allows you to create personalized ads towards your customers and also personalized landing pages that align with the ads. So you're going to have higher conversions and influence pipeline reporting to prove that your ABM works. So if you want to learn more, just go to carrot.ai and you can join the waitlist. Again, it's carrot.ai. Do you think voice memos are rude?
No, I do voice memos all the time. You're talking about like when I go on WhatsApp and I'm on a thread and people are typing stuff, I just click a microphone button and talk and then they'll type back an answer to my question.
Not even that. When I say voice memos, I mean an audio message. So if I send you an audio message for 2 minutes, you have to listen to the whole 2 minutes.
Yeah, but that's what I just did. So on WhatsApp, I had a question with some lawyers. Yeah, I straight up put an audio message.
They have to listen to my message. It's not Transcribe that text. Yeah.
And then they'll text me back.
So here's my take on it. I used to believe that voice memos were rude because it takes more time for the listener to listen and it's way convenient for me. But I've kind of changed my stance now because I drop a lot of voice messages. It includes my intonations, my voice, my vibe. And I'm basically— I can tell a story too to get them convinced, right? Whereas I can't do that with just typing everything out. So I used to care about, hey, like it's equal for me if I typed it out and you read it, it's the equal pain, right? Now I'm like, No, screw that. Sometimes I need to communicate a story and it's way more effective if I send a voice memo. So I have backtracked, especially in business now. I think voice memos are good, but I will never send a voicemail to you, memo to you. You've never sent one to me either. Like, I won't do that.
I don't mind voice memos. If you have something to say, like a story, it's the right time, right place to send them.
The worst is when with dating, when they send me 10 at a time, I'm just like, dude.
So when you're dating people in today's world, keep in mind, I haven't dated people in a long time.
Especially when I was living in Miami.
You're saying someone would just send 10 voice memos?
They're used to, because in their, like different cultures, right? They're used to just like, sometimes I'll look at their text, it's all voice memos.
But why wouldn't they just send one voice memo?
Because they have a lot to say. So yeah, that's my point. But in business we have to be concise. So, but I'm just saying, my point is like, I'll send videos on Friday. Like before I came here, I recorded a video saying, hey, here's how we're trending towards the mission right now. Here's what we're working on. Here's the thing. Like, I think it's important for people to see the leader and To hear from the leader as well. So, yep.
My problem is I'm a really like audio, like a phone real-time or FaceTime type of person where I'm just like, let's just go and solve this right now if it's important. If not, you know, I don't care to deal with it because if it's not, if it's, if I don't need to deal with it right now, it's not that important where it's going to impact the business much and someone else can handle it. But if it's super important, I just want it solved right now and I don't care. And I just rather get on the phone over a voice memo.
Yeah, it certainly gets things done faster, but there's always trade-offs too, right? Like, obviously, like sometimes you might try to push something and then you realize, oh crap, I should have slowed down maybe. Like what percent of the time has that happened to you?
That I realized I should slow down? Uh-huh.
Be honest, be honest.
Yeah, yeah, yeah, yeah. I'm actually going to be honest. It's not the answer you're looking for though.
I'm not looking for any answer.
No, you're like percentage of the time where I should have slowed down?
Uh-huh.
I look at it as zero.
Okay.
I push and I don't realize I should slow down because my nature is just push, push, push and not let go.
Yeah.
And then they'll tell me I need to slow down or I'm pushing too much.
And do you?
I do.
Yeah.
But I usually— my personality type is I'm gonna push really hard and then people will tell me when I'm wrong.
Yeah.
Versus I don't know how to not push.
Yeah.
That is a weakness of mine to not understand that. Yeah, but I tend to push and I don't know how to stop pushing.
You know what's interesting? So I'm similar, right? Obviously we have similar personalities and I push and especially we push ourselves really hard, right? Yeah. And I used— I think I used to care a lot more when people were— they're just like, like people like, oh my God, it's too fast for me, mate. I can't take it right now. My mindset is like, hey, like maybe it is too fast for you. And it's okay. Maybe we can work on something where maybe you adapt or maybe let's help you find something else. But my mindset before was like, oh, I'm going to try to change my personality. Whereas you always just had the same personality. I'm just like, as we get older, I'm like, I just can't, I can't change it.
No, but years ago, people did tell me I pushed too much and I should try to slow it down.
Did Kamo tell you that too?
No, he never really told me that. Kamo would tell me I changed my mind too much. That was a big problem in business. And I think I've been really good about not changing my mind in business, but you know, in my personal life—
Yeah. You're either bad in personal or business, not both.
Yes. But my personal life used to be good. Now my personal life, I change my mind a lot. Business, I'm much better. You agree with that, right?
Yeah.
I mean, I don't think you— I'm pretty consistent. At least my executive team tells me I am.
You got pretty there with acquisitions. You started to get a little shaky with the acquisitions, but then I think right now it's pretty good.
No, acquisitions, we were pretty picky.
You were doing a lot for a while.
No, but even then we've been picky on what we actually signed. And our diligence process was so long, none of our acquisitions actually fell through.
So that actually protected you from being too fast because the diligence was so long.
Acquisitions, none of them were ever fast. They were always slow just because of the process. And it was to protect our capital because you make a mistake like that and you spend tens of millions of dollars or even millions.
The time.
And the time. But we had an acquisition team, so them spending the time, that's part of their job and that's what our acquisition team does. They should be spending the time on that. And that's why we got one.
Yeah.
But what I found back in the day, people would be like, oh, you're pushing too hard. People are going to quit. You're going to irritate them. You're going to make mistakes. The organization, when you push people too fast, that's when it costs you a lot of money. And what I found is when I slow down on pushing, I notice a direct effect of not growing as fast, just hands down, because I can't understand— this is just me, this is one of my faults— I can't understand when to push and when not to push. What I found works better is just to push, and the executive team or my co-founder will tell me it's too much, or they'll tell people to just ignore me.
Yeah.
And they're like, oh, we'll talk to Neil.
Yeah.
And that has been, I wouldn't say a balance on my end. It's been a balance for the organization because I have other people who will get in the way and stop the pain that I may cause from pushing too much.
You know what they call that?
In the wrong area.
They call that managing up. So people know how to work with you now. Now you have enough scale where it's like, yeah, they know how to tell other people how to manage up and manage your personality basically. That's managing up. Correct.
So they'll say, I'm pushing too much. But if I believe my push is the right method, like I remember when we were trying to expand globally. They're like, you want to expand to how many countries, how fast? They're like, this is going to be expensive, this is too fast. We don't recommend it. I push and I push more than what my team wanted and I got less than what I wanted. So there was some sort of balance there, but I pushed and I did not care. And it's paying off today. And if I had to go back, it would've been more painful and they were right on that. I would've pushed for more knowing what I know now back then because it would've created a bigger organization in today's world.
So you're saying if you could go back in time, you would've pushed even harder, even though you kind of regretted pushing that hard?
Uh-huh.
Yeah.
Because, and I get why my management team was like, you can't just keep pushing. It's a really expensive endeavor that you're about to embark. I would've personally figured it out.
Yeah. Well, it's also— it's your money too.
Yeah.
Yeah. That is it for today, and we'll see you tomorrow.
