Competition Demystified

Greenwald's argument is that almost everything written about competitive advantage is a list of nice qualities, and that there are really only three things that keep competitors out: customers who cannot easily switch, costs you have that others cannot get, and economies of scale inside a market small enough that only one player fits.

The scale point is what changed how I look at deals. A moat is not about being big, it is about being big relative to the market you are in, and a regional business that owns its region can be far more defensible than a national one fighting everywhere at once.

For a resort in Jay, Oklahoma the barrier is not brand and it is not technology. It is that almost nobody wants to run a mechanical fleet, a kitchen and a hospitality operation at the same time, because it is unpleasant and it eats capital. Greenwald never says the unpleasantness is the moat. He is the reason I can say it.