Dorsey’s question is simple: why can this business keep earning high returns when competitors would obviously like a share of them?
The four moats
- Intangible assets — brands, patents, regulatory licences.
- Switching costs — leaving is expensive, disruptive or risky.
- Network effect — each new user makes it more valuable to everyone else.
- Cost advantage — process, scale or a location rivals can’t replicate.
What isn’t a moat
Good management, hot products, high market share and operational efficiency all look like moats and aren’t. They can be copied or hired away.
Why a trader should care
Moats explain persistence. A stock without one can still run, but the run is sentiment; with one, earnings can keep compounding.
Your own take goes here — one Indian business you think genuinely has a moat, and one widely believed to that doesn’t.