Examples of competitive moats include Google's brand (people 'Google it'), Stripe's embedded payments and scale, WiseTech's mission-critical logistics software with about 1% annual churn, Netflix's ongoing usage, Strava's network of more than 200 million athletes and TechnologyOne's switching costs. Small businesses build moats too: maintenance contracts, membership plans and local referral networks.
Key takeaways
- The strongest moats combine several factors. Stripe and Nubank each score on four or five MOATS letters.
- Brand alone is a weak moat. Dollar Shave Club's famous video didn't stop rivals copying a razor subscription.
- Switching costs and embedding protect enterprise software: TechnologyOne's net revenue retention was 115% in FY25.
- Moats can collapse. Chegg lost about half its revenue once AI offered free homework answers.
David Velez walked into a bank in São Paulo and felt like they were doing him a favor by letting him open an account.
Another time, security patted him down because his laptop set off the metal detector. They thought he had a gun.
Velez was an investor who'd been sent to Brazil to look for deals. What he found was an industry with a huge, profitable customer base, terrible service and credit card interest rates averaging more than 270 percent. Lots of banks. Very few moats.
So he built one. Nubank launched with a purple, no-annual-fee credit card managed in a free app, plus its own credit score, so people with no banking history could get credit. Twenty percent of its first customers had never had a credit card.
In its second quarter of 2026, Nubank had 139 million customers and passed $1 billion in quarterly net income for the first time.
That's a moat. Let me show you twenty examples, Nubank included, sorted by the type of moat they dug. Then five that didn't hold.
What are the main types of competitive moat?
Investors usually talk about five or six moat types. Here's how they map to the MOATS framework from the book.
| Common moat type | MOATS letter | What it looks like |
|---|---|---|
| Brand and low-cost acquisition | Marketing supremacy | Customers seek you out; you don't buy every lead |
| Diversification | One | No single client, channel, supplier or person can sink you |
| Network effects, habit | Audience | The product gets better as more people use it, and they use it often |
| Cost advantage, scale, unique know-how | Toughness | You can do something others can't, at margins they can't match |
| Switching costs, embedding | Switching | Leaving you would be a project, not a click |
Marketing supremacy moats
1. Google. We don't search. We Google. When your brand becomes the verb, customers skip the comparison step entirely.
2. Who Gives A Crap. Co-founder Simon Griffiths sat on a toilet for 50 hours in 2012 to crowdfund the first production run. The colorful packaging made a boring product shareable, and the 50%-of-profits promise gave people a reason to pay and stay. It built a consumables subscription, then took the brand into Tesco, Waitrose and Whole Foods. See how Who Gives A Crap reached the supermarket.
3. Apple. Most buyers don't comparison shop. They buy the brand, then the ecosystem keeps them (that's switching costs doing the heavy lifting).
"One" moats (no single point of failure)
4. GoPro. Total revenue fell from $1,005 million in 2023 to $652 million in 2025 as camera sales dropped. Subscription and service revenue held flat at about $106 million. The subscription meant GoPro wasn't relying on one revenue line when camera sales dropped.
5. Nubank. It started with one card in one country. It now spans credit, deposits, insurance and investments across Brazil, Mexico and Colombia. One product failing wouldn't sink it.
Audience moats
6. Netflix (ongoing usage). A huge library plus recommendations gives you a reason to come back every night. In early 2021 its monthly churn was about 2.4%, against roughly 7% for other premium video services.
7. Strava (network effects). Every athlete who joins makes clubs, leaderboards and local segments more valuable for their friends. Strava cited more than 150 million registered users in 2025 and said it had passed 200 million by August 2026. Read how Strava turned free athletes into subscribers.
8. Duolingo (habit). Streaks make skipping a day feel like a loss. Its June 2026 "Streak Revival" event brought back 15.4 million learners.
9. Zillow (audience as the asset). In late 2025 Zillow averaged 221 million monthly unique users. It keeps the consumer side free and charges agents and landlords for access to them.
Toughness moats
10. WiseTech (know-how and margin). CargoWise runs the operations of global freight forwarders. The book quoted a 92% profit margin and about 1% annual churn. In 2026 WiseTech argued that its embedded customs and regulatory rules "cannot be replicated by prompting an AI model," and it removed seat fees entirely so customers getting more productive with AI wouldn't shrink its revenue.
11. Microsoft (marginal profitability). Office costs a fortune to build and almost nothing to deliver to one more subscriber. Every extra sale is close to pure gross profit.
12. Procore (pricing that scales with the customer). Procore prices on a builder's construction volume with unlimited users. In 2025 its gross revenue retention was 95%.
Switching moats
13. TechnologyOne. Enterprise software for government, health and education, so embedded that churn was under 1% in 2020 and net revenue retention reached 115% in FY25.
14. Slack. More than 2,000 integrations make it the hub of the working day. Once a team has plugged everything into it, leaving means rebuilding its workflows. In 2025 Slack bundled AI into its Business+ plan and raised the price from $12.50 to $15 per user.
15. Xero. Years of a business's financial history live inside it. Customers rarely leave over a few dollars a month, which is why Xero reported a 23% lift in average revenue per customer in fiscal 2026 with a simpler plan line-up and steady price rises.
16. Employment Hero. It lands with payroll, the service that's most painful to move, then adds HR, recruitment and benefits. It passed A$300 million in annual recurring revenue in October 2025. Read how Employment Hero grew tenfold.
17. Stripe (several moats at once). Developer-friendly onboarding, millions of small customers (low concentration), higher-margin add-ons and scale. Businesses processed about $1.9 trillion on Stripe in 2025. It's the example I used in the book to show you don't need every factor; see how Stripe's moat got wider.
How wide is your moat?
Score your own business on the five MOATS factors with the free MOATS Scorecard and see which examples on this page you should copy.
Moat examples for small businesses
You don't need a trillion dollars of payments to have a moat. Here are three small-business versions.
18. The heating and cooling contractor. Maintenance agreements make the contractor the first call when something breaks. In one vendor case study, Atlantic Refrigeration grew from 16 to more than 50 preventive maintenance contracts over three years. The moat is the relationship and the service history.
19. The vet clinic. Greencross Vets' Healthy Pets Plus membership costs A$660 a year (A$696 for seniors), payable fortnightly, monthly or annually. Pets come in more often, and owners stop shopping around.
20. The dental practice. In-house membership plans give uninsured patients preventive care for a monthly fee plus a discount on treatment. Members come in for their included cleanings, which builds trust and treatment acceptance.
Each of these scores on Audience (ongoing usage) and Switching (the records and relationship) without any technology moat at all.
Five moats that failed
| Company | The moat it relied on | What happened |
|---|---|---|
| Chegg | A huge library of homework answers, plus Google traffic | Free AI answers arrived; Q2 2026 revenue fell 51% |
| Columbia House | Customer inertia (negative-option billing) | Stopped taking orders in September 2026 after 71 years, Quartz reported |
| Peloton | Community plus the sunk cost of a $2,000 bike | Monthly churn rose from 0.73% to 2.2% |
| Dropbox | Being first to easy cloud storage | Storage became a commodity; paying users flat at about 18.2 million |
| Dollar Shave Club | A brilliant launch video (brand only) | Rivals copied the model; Unilever sold a majority stake to private equity in 2023 |
The pattern: each was a single moat. When it was crossed, there was nothing behind it.
Network Effects ScorecardWhich of the six network effects could you build?Open the free tool →How to copy these moats in your business
| If you admire... | The small-business version |
|---|---|
| Google's brand | Become the name locals mention first in one narrow niche |
| GoPro's second revenue line | Add a care plan, membership or service subscription to one-off sales |
| Strava's network | Start a club, challenge or leaderboard among your customers |
| WiseTech's know-how | Package your methodology, templates or compliance knowledge into the service |
| TechnologyOne's embedding | Connect to your clients' accounting, booking or calendar tools |
| Employment Hero's anchor product | Lead with the service that's hardest to move (payroll, records, compliance) |
What to do next
- Pick the three examples on this page closest to your business.
- Write down which MOATS letters they score on, and which ones you score on.
- Check your single moat risk. If you rely on one moat, which one would a competitor attack first?
- Score yourself with the MOATS Scorecard and pick one factor to strengthen this quarter.
The full chapter, with Stripe, Nubank, GoPro and the action exercises, is in the book.
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Claim the free hardcover Get the ebookFrequently asked questions
What is the strongest type of competitive moat?
In the book I rank network effects first and sustainable competitive advantage a close second. Network effects strengthen themselves: every new customer makes the product more valuable for the next. In practice, the safest businesses combine several moats. Stripe has scale, low customer concentration and a product developers prefer. One moat can be crossed. Three are much harder.
What is a brand moat?
A brand moat exists when customers choose you without comparing alternatives, because of what your name stands for. Google, Apple and Tesla are the classic examples. It's real, but it's the weakest moat on its own. Kodak, Blockbuster and Borders all had famous brands and were still overtaken. Use brand to support other moats, not replace them.
What's the difference between a moat and a competitive advantage?
A competitive advantage is something you do better than rivals today. A moat is what stops them catching up tomorrow. A lower price is an advantage; a cost structure no competitor can match is a moat. In the MOATS framework, sustainable competitive advantage is one of eleven moat factors, sitting alongside switching costs, network effects and others.
How long does it take to build a moat?
Some moats take years: brand, scale and network effects build slowly. Others can start in weeks: moving clients onto annual contracts, adding a second supplier, connecting your service to the tools customers already use, or starting a referral network with local businesses. Begin with the quick ones while you work on the slow ones.
Do moats still matter now that AI makes copying easier?
More than ever. AI makes it cheaper to copy a product's features, so features alone are a thinner moat than they were. What AI struggles to copy is proprietary data, embedded workflows, regulatory know-how, communities and trusted relationships. Those are where to dig. See the guide to moats in the AI era for detail.
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Robert Coorey, MBA
Robert is the author of The Subscription Playbook and Feed a Starving Crowd and a Director at BPAG Accountants in Sydney. More about Robert.
Sources
- Nu Holdings, Q2 2026 results (13 Aug 2026)
- Stripe, 2025 annual letter
- WiseTech Global, 1H26 results briefing (Feb 2026)
- GoPro, Q4 and full-year 2025 results
- Strava press, Strava to acquire Runna (Apr 2025)
- Dropbox, Q2 2026 results
- Employment Hero, surpasses A$300M ARR (Oct 2025)
Facts and prices checked 27 October 2026. Spotted something out of date? Tell us.