Most investors know to at least glance at a company’s moat before dipping a toe in. A moat is basically whatever competitive advantage a company has that makes it hard for customers to go somewhere else for the same thing. A corner store selling books has a small moat; a rocket company selling seats into space has a big one.
Do artists, writers, musicians, etc. ever think about their own moats?
The king of money, Warren Buffett, won’t invest in a business without a giant moat in place. Lately I’ve been reading a lot about Amazon’s and came across this illuminating distinction between the two approaches.
“A Bezos moat is premised on the idea that the customer is willingly and is frequently entering into a commercial transaction with the company because the customer is deriving more value from the transaction than he or she is paying for.
A Buffett Moat attempts to identify companies that will be the only one (or one of a few) available in a commercial landscape, so that the customer is, in effect, forced to transact with these companies (i.e. only bridge, only newspaper, only soft drink option).”
For investors, keep in mind this isn’t an either/or scenario. Anyone would do well to seek out both kinds for their portfolios.
For creatives, this is a good frame for how to build their business. Before you get all poker-spined about the purity of art, please know that I define “business” very broadly. It doesn’t matter if you have LLC papers or even made a single penny. As long as you want someone to buy (with money, publicity, validation) what you’re selling (words, a canvas, an idea), you’re a business.
Sure, there’s self-worth, self-expression, authenticity, etc. They are all valuable and necessary things and I encourage you to embrace them in your pursuit for self-actualization. I’m working on that myself. BUT at the end of the day, they are things that provide real value only for you. No one’s going to pay you just so you can find your bliss.
What they will pay you for is something from the Amazon moat and/or the Buffett moat. What kind of moat do you want to build for yourself and your work?
The bigger your moat, the fewer competitors there’ll be storming the castle, which in turn will free up time and energy for you to create your art. Isn’t that the best investment of all?