How about speed and quality of execution as a moat? Nvidia for example broke through in part because of their ability to design and ship new chips 2x faster than the competition. As a result, they were impossible to catch or keep up with in the price/performance/cost equation. This seems to be still true today - perhaps even more so.
This includes some really strong critical considerations of this current dynamic. Perhaps this is ignorantly optimistic of me as someone in software, I agree with the idea that complex code will cease to offer the depth of moat it once did, but I am not so sure that software solving meaningful problems will truly become a commodity.
The professional services industry isn't a commodity, yet there is no technological moat to providing their managerial and consulting services. To your points, they rely on expertise, distribution, etc. to differentiate.
This isn't so much a comment for OnlyCFOs, but for the people that think breaking down the development barrier will kill the software industry. That might be true if the only thing propping up the industry was the barrier to entry of highly skilled technical expertise, but it isn't. Any meaningfully complex problem that a company solves with software requires a deep understanding, attention to detail, and consulting towards an outcome.
For many software companies, there unique ability to do that has always been the real moat.
Yep - software development isn't the only moat. But many companies relied on it as their primary moat. But now they have to find more durable moats. There are certainly other moats (the 5 I mentioned), but they may be harder for many to maintain
What examples are there of a software company whose moat was development/complexity? If that was their primary moat they deserve a discounted multiple because there would be constant debate about terminal value. True vertical Saas like PAR or PCOR, own the control point and have account and workflow gravity, so even if an LLM finds a way to steal your data, it won't matter. As a workflow app, you can't sleep on Al sure, but if you are mission-critical, you have a lot of moats that work in your favor (distribution/switching cost). As Tidemark pointed out "These dynamics are so strong that desktop license software from the 90s still occupies the control point for dentist offices around the world. We're not saying that the power dynamics don't change over time, but this fight shows the power of a control point over the latest and greatest technology.”
Even before everything could be built by a team of Dev's in 15 days the product was never that big of a moat for most software companies except for specific complex ones there are ten apps for everything
Good service, marketing, stickiness, trust, niche were the notes always i believe
How about speed and quality of execution as a moat? Nvidia for example broke through in part because of their ability to design and ship new chips 2x faster than the competition. As a result, they were impossible to catch or keep up with in the price/performance/cost equation. This seems to be still true today - perhaps even more so.
Yes
This includes some really strong critical considerations of this current dynamic. Perhaps this is ignorantly optimistic of me as someone in software, I agree with the idea that complex code will cease to offer the depth of moat it once did, but I am not so sure that software solving meaningful problems will truly become a commodity.
The professional services industry isn't a commodity, yet there is no technological moat to providing their managerial and consulting services. To your points, they rely on expertise, distribution, etc. to differentiate.
This isn't so much a comment for OnlyCFOs, but for the people that think breaking down the development barrier will kill the software industry. That might be true if the only thing propping up the industry was the barrier to entry of highly skilled technical expertise, but it isn't. Any meaningfully complex problem that a company solves with software requires a deep understanding, attention to detail, and consulting towards an outcome.
For many software companies, there unique ability to do that has always been the real moat.
Yep - software development isn't the only moat. But many companies relied on it as their primary moat. But now they have to find more durable moats. There are certainly other moats (the 5 I mentioned), but they may be harder for many to maintain
What examples are there of a software company whose moat was development/complexity? If that was their primary moat they deserve a discounted multiple because there would be constant debate about terminal value. True vertical Saas like PAR or PCOR, own the control point and have account and workflow gravity, so even if an LLM finds a way to steal your data, it won't matter. As a workflow app, you can't sleep on Al sure, but if you are mission-critical, you have a lot of moats that work in your favor (distribution/switching cost). As Tidemark pointed out "These dynamics are so strong that desktop license software from the 90s still occupies the control point for dentist offices around the world. We're not saying that the power dynamics don't change over time, but this fight shows the power of a control point over the latest and greatest technology.”
Even before everything could be built by a team of Dev's in 15 days the product was never that big of a moat for most software companies except for specific complex ones there are ten apps for everything
Good service, marketing, stickiness, trust, niche were the notes always i believe