Becoming Warren Buffett: (2) The Business Moat

(A moat is this artificial lake around the castle that prevents the castle from external threats)

We all know the importance of moats in war.

But what does a business moat mean?

The business moat was a policy Warren Buffet used, and for sure, it made him great success.

I'll give you an example of one of Warren Buffet's companies, it's called (See's Candies).

Warren Buffet said:

Imagine if you bought a box of chocolate for your girlfriend on your first date, and she kissed you for the first time, and she liked it so much, you'll come again to buy the same box of chocolate or at least buy from the same shop, and no matter how the prices change you'll purchase it, because you know your girlfriend liked it, and you won't go to her on valentine's day and say: "I've got the best deal" it doesn't work that way.

The price is immaterial to a great extent, if you have an economic castle, everyone would want to take it down, and you better have a moat to protect it, and you better also have a knight that knows what he does.

I know that you maybe didn't understand much, and I'll make it more simple right now.

You see that most people who bought their phones from (Apple) most probably won't buy phones from another company, and despite not liking this company personally, but I have to admit that they have an excellent business moat. Because they feel committed to the company, they buy their phones even when the prices get high and don't give out a charger or earphones with the latest mobile.

This is precisely what Warren Buffet meant with a business moat.

The idea of a moat in business is so intelligent because competitors could lower your market share with new technology or features all the time, but when you have a moat, you're secure.

Think about how you could apply this idea in your job, business, or whatever activity you do.

That's all for today, and I hope that was helpful; I wish you great success in life.