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In startup land, everyone loves talking about “moats” - those defensive trenches that keep competitors at bay. But in 2025, do those moats actually hold water anymore?
I’ve watched this debate from both sides of the table. As an engineer, I once thought our patented algorithm was our moat - until a GitHub project matched 80% of it six months later. Oof.
We’re in an era where spinning up a new app is easier than ever. With AI-assisted coding, no-code tools, and cloud infra, the barriers are down. If your moat is “we write complex code,” there’s an AI and ten hungry devs who can match you by next Friday.
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💀 Moats That Didn’t Make It (Moats with floats?)
Let’s look at some case studies:
Zoom
Dominated pandemic-era video conferencing
Got undercut by Microsoft Teams (bundled with Office) and Google Meet
What seemed like a moat (UX + brand) got flattened by distribution
Dropbox
Once king of cloud storage and sync
Overtaken by Google Drive, iCloud, OneDrive - all bundled, all “good enough”
Analysts literally said: “Dropbox has no moat”
Slack
Great UX, great network effects
Lost to Microsoft Teams due to bundling and enterprise muscle
Got acquired by Salesforce to survive
Lesson: If your product can be replicated and bundled by a platform player, your moat better be more than UI polish.
🚧 Why Moats Are Harder Now
🧱 Building is nearly free - AI tools, open source, and cloud infra mean anyone can spin up a clone.
🧪 Tech commoditizes fast - proprietary features get copied or open-sourced.
📦 Distribution > Code - if they already have the customer, your better widget won’t matter.
🔁 Switching costs are lower - unless you’re embedded, users churn easily.
👑 No one’s safe - even giants are on defense (Meta vs TikTok, Google vs ChatGPT, etc.)
🛡️ The Moats That Still Matter
If you want real defensibility, consider these:
1. Distribution & Network Effects
Be everywhere your users are.
Example: WhatsApp and WeChat are irreplaceable due to ubiquity.
2. Proprietary Data
AI models trained on unique data can stay ahead.
Ex: Google Maps, GitHub.
3. Brand & Trust
Especially in B2B and security.
Ex: Salesforce - not sexy, but safe.
4. Ecosystem Lock-In
Create switching costs with integrations, plugins, community.
Ex: Adobe Photoshop, Shopify’s app store.
5. Regulatory Moats
Fintech and healthtech with compliance & licensing advantages.
Not easy to copy - even with better tech.
6. Multi-Product Suites
Hard for point-solutions to dislodge a suite.
Ex: Microsoft’s Office + Teams + Azure stack
🧑💻 For Engineers
Code isn’t the moat - but how and what you build can be.
Help dig moats via:
Ecosystem integration
Data collection systems
APIs and workflow glue
Be agile - product velocity itself is a weapon.
Think less castle-builder, more shipwright. Ship fast. Outmaneuver.
🚀 For Founders
Bake defensibility into the roadmap:
Start niche and go deep
Use platforms strategically (but beware dependencies)
Cultivate community - evangelism can buy time
Plan for future moats (data, integrations, usage compounding)
Be 10x or bundle-proof
“We’ll figure out a moat later” = 🚩. Show the seeds now.
💸 For Investors
Ask: What stops a BigCo from doing this next quarter?
or
Ask: What stops 10 cracked engineers backed by Sequoia from doing better & faster?
Watch for:
Real user love
Proprietary data
Network effects
Go-to-market edge
AI isn’t a moat unless it’s paired with a unique dataset or hard-to-replicate ops.
If the founders don’t have an answer for “why us, not them,” you probably do: ❌
🏁 Closing Thoughts
So … do moats still exist?
Yes, but they’re earned through execution, speed, and strategy. Most moats today are compounders:
Data that gets better
Communities that deepen
Features that become workflows
If you don’t have a moat yet — make one. If you do — deepen it. If someone’s catching up — move.
The only real constant is motion. In 2025, software moats are not ditches. They’re treadmills. Keep running.
Signing off and signing zero checks,
SWEdonym
PS: What do you think? Are software moats truly disappearing, or have you seen ones I missed? I’m always happy to hear your take (or your counterpoints) – hit reply or drop a comment. Defensibility is a team sport!
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