A Moat Is Not A Noun. It's A Verb.

0:00So people like to talk about moats, right? right? Do you want to say something? No. Okay. So people like to talk about moats and moats are defensibility. Like Warren Buffett used to like to talk about moats. Like when you have a castle, you want moats protecting it. So it's not as a, you know, it's more defensible, right? And so do you want to describe it and how it will be in the castle? Yeah. Okay. So like you have a water moat around the castle. So like you have the drawbridge that's up. You can't just, you know, you can't just attack the castle and scale it. Right. So this is back in the day.

0:27Now, Well, now today, founders, businesses, they like to talk about moats, you know, or if you're trying to raise investment, people are like, oh, like, what moat do you have? Like, how is this defensible? How come, you know, OpenAI can't just kill you, right? But people have described a moat as what? A noun. But a moat, actually, Neil, is a verb. And so Gary Tan said this from YC, it's a verb. So popular belief says startups win because they have one big game-changing insight. But the Windsurf CEO argues that's a myth. Every single insight that we have is a depreciating insight, okay? So if I tell you this new idea with ChachiB, it's already depreciating right now.

1:02In other words, the value of your insight declines fast. Competitors catch up, markets shift. What was once novel becomes table stakes. So yesterday's amazing was today's average, right? NVIDIA is an example. Even at trillion dollar scale on 70 % gross margins, they still have to innovate or AMD catches up, right? The real advantage is continuously generating new insights and executing on them. So it's not about the insight you had one year ago. It's whether you can compound that advantage over and over again. And so a moat is not a noun. It's a verb. So you have to move very quickly. And that speed is actually a moat now.

1:36Like people will say, oh, switching costs, that's a moat. Branding is a moat. Your processing power, like Toyota, for example, that's a moat. But speed, something that you've always had, speed is a moat, right? And it's hard though, because the AI, everything moves so much faster. It doesn't like, okay, even though let's say I read more than you or whatever, you're still, your speed is really quick. You have a different way of learning. You're calling people all the time. You're still pushing ideas through. And so we have different ways of pushing through our speed. And remember the AI called me out.

2:04It's like, yeah, you're an F1 driver and you just need to build a system. That's like a, like an F1 car. What did it say? It's an F1 driver in a car. You're F1 driver in a Honda Civic right now. Right. I was like, I was like, oh. Good cars though. Good cars. Motherfucker. So pardon my language. But, and I shared it with my team too. and we're laughing about it because it's like the system will scale, right? Over time. And earlier it goes back to how much capacity does your system have, does your team have, right? And so for you right now, like sure, you might have a bunch of ideas, but that is the moat ultimately.

2:37Because if you start to slow down, if you start to say, I'm gonna get out of these people's way, I'm gonna let them do their thing. You think they're gonna move as quickly as you are? You think they're gonna have the same urgency you're gonna have? So if you had a pick, okay, what do you think the motes are right now? If you had to pick from everything that you've described, what do you think the main motes are that are still remaining? So this is cheating. There's a great book I read called Seven Powers. And so here are the motes that I remember, okay? Speed is actually not included in that book.

3:04It should be included, but there's seven, okay? One is brand. So Coca-Cola would be an example. I agree with that. I think that's actually the only moat left in marketing. Could be. Now you have another one, switching costs. So you see this. The more services you build in, if you can even do it at 70, 80%, that's still more superior than someone doing one service at 100%, right? So switching costs, process power. I just mentioned Toyota. The reason why, everyone's like, why is Toyota so successful? Why is Tesla so successful? Manufacturing their process power. That's, I mean, Elon has said arguably the hardest thing was actually the manufacturing piece with Tesla, okay?

3:40Then you also have network effects. So you look at Facebook, Instagram or whatever, right? The more people use a network, the more powerful it becomes. and then the other ones those are four so the reason I like marketing I mean I like brand and why I believe it's the only moat whether it's moving fast or whether it's spending money to try to build a network effect or optimizing systems and processes some people can figure that out some people can't money may be able to potentially solve something and same with time but brand is is that weird thing where either someone has it or they don't and you try building it and either it works or it doesn't and it doesn't matter how much money you spend yeah you know peter thiel talks about this a lot or he's talked about in the past i don't know about a lot it's that weird thing that's really hard to put your finger on and being like this is the way you create amazing successful brand yeah and it's just like it's just something that kind of happens yeah or it doesn't and it has nothing to do with how much money you spend because i've seen people spend an arm and a lag and their brand still sucks and people spend barely anything and people love the brand.

4:50You know, Steve Jobs said this. Steve Jobs says that once you sell to someone, you have a customer, but once they talk about you to other people, you have a brand. Yeah. Yeah. And so let me, let me give you the other one. So we talked about network effects. We talked about, um, switching costs. Counter-positioning would be another one, right? So it's like, and I think this is a weak mode actually. Sure. You can counter-position yourself and say, remember what Apple was counter-positioning versus the PC? Um, I don't, I, I think that's kind of weak. It doesn't stand on itself that well. Oh, yeah.

5:17The ads. I'm a PC. I'm a Mac. Yeah. So, by the way, at that point, Apple wasn't as strong as they were today. They were still coming back. And then cornered resource. So, for example, if I have all the uranium in the world, guess what? I win. So, building nuclear power. You see all the natural earth minerals? All the stocks are booming right now because the US and China are trying to buy everything up. Yeah. Dude, by the way, you're going to need like$3.25 trillion dollars to meet all the electricity demands in the next like you know couple of like next decade or so maybe even a little longer than that branding power we talked about process power we talked about um scale economies too um would be another one but these are kind of the main ones but i think speed goes into this one speed should be one of the the eighth power because i do believe the reason you've been able to be successful and and even me as well over over time over over long periods of time like there's no doubt like we'll get you know you'll we'll do fine is my point Right.

6:11But it's because of speed and it's because of urgency. And it's hard. Like the reason why startups do really well right now is because I remember I talked to that Lindy CEO. He's like, oh yeah, we were, we're 996. We're in the office all the time. I mean, you look at some of these AI companies, they're working there seven days a week. You can't do that forever, but there's a speed advantage there. Yes. There definitely is a speed advantage. It is harder to be fast when you have a big organization. And when you're, when you're remote. Yeah. And when you're, And I don't think remote has been too much of an issue for us.

6:40What I found is we just create smaller teams and we can get a lot of stuff done. It doesn't matter for remote. Yeah, actually, I backtrack too. Because with our, I would say, the high performing people that directly report to me, we're just huddling each other all the time on Slack. So we just call each other directly. I was like, huddle? Yeah, it's basically a phone call. I'm sure you do it in Teams, right? Teams call? Yeah, we do Teams. Yeah, I mean, not we, but you just call them when you want to call them, don't you? Yeah, I don't even do Teams. You don't have everyone's phone number. I have everyone's phone number.

7:06I don't do a Teams call either. I've been on Teams calls, but what I found is what's interesting, because I was with Heathen the other day and we were just talking about Slack, Zoom, and Teams and even like the Google Meets and stuff like that. He's like, oh, in the Bay, everyone uses Zoom. Oh, interesting. And then I was like, really? And I'm like, I find everyone in my world using Teams. And he's like, really? He's like, no one in the Bay uses Teams. I'm like, well, what I found is most enterprise businesses are on Teams globally. I don't know too many people who are on Zoom. Dude, I mean, this is the switching costing with Microsoft.

7:51Because they have the distribution there and it's cheaper to just use everything. Network effect? Network effect? Yeah. And it's cheaper because they give you that shit for free. Yeah. And brand, you know they're not going to screw on with your security too, right? So they have multiple ones. Yes. Yeah. And I do think they charge now, but originally when we were on Teams, it was free and we're like, okay. And people complained. They're like, oh, I want this in Zoom and it's so much better. And I'm like, it's free and we're already on Microsoft. Everyone's using it. And I remember our organization, a lot of people hit me up being like, I don't want to switch from Gmail to Outlook.

8:26And this is where you're like, hey, I have no decision here. Even though you do. Even though you do. I had a decision. yeah but you don't want to engage is my point oh I didn't engage I just said whatever the executives and you guys decided that you should but it's your decision well I didn't care because I'm still on Gmail because my email is neilpatel.com it's your cost no no no so if you email people on our company it's their name or first initial and last name whatever it is some people have first name like Nick because he was early on at like npdigital.com. Yeah, but on Outlook, right? It was on Gmail.

9:05Eventually they got switched to Outlook. My email has always been neil at neilpatel.com. I know, yeah. So I got to stay on Gmail so their switch does not impact me. Yeah, but my point is you do care about the cost. Like you say, yeah, yeah, yeah. That's what I'm saying. It is kind of your decision still. Yeah, and the cost was large enough where I wanted the savings. Yeah. And I was okay with the pain because this sounds bad, but I didn't have to experience the pain because I'm still on Gmail. I always, this is the thing, I always knew you would never switch on anything. So like I had a sense that even though you guys were switching to Microsoft, I was like, you're not going to change anything.

9:44Yeah, even Teams, people send me like this Teams thing. I'm like, I can join Teams calls, but if like they're chatting me on Teams, I'm like, dude, I don't see it. I'm like, you need me, just call me. Dude, speaking of calls. Okay, so here's a good one. So do you think voice memos are rude? If you've ever built a website, you know how tough it can be to keep a strong design while ensuring site performance is fast. That's where Framer comes in, and it totally changes the game. Framer is the design-first, no-code website builder that lets anyone ship a production-ready site in minutes. I recently built a custom landing page in just a few hours.

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11:55Sign up for your$1 per month trial and start selling today at Shopify.com slash marketing school. Go to Shopify.com slash marketing school. Shopify.com slash marketing school. No, I do voice memos all the time. You're talking about like when I go on WhatsApp and I'm on a thread and people are typing stuff. I just click a microphone button and talk and then they'll type back an answer to my question. Not even that. When I say voice memos, I mean an audio message. So if I send you an audio message for two minutes, you have to listen to the whole two minutes. Yeah, but that's what I just did. So on WhatsApp, I had a question with some lawyers.

12:29I straight up put an audio message. They have to listen to my message. It's not transcribing to text. Got it, got it, got it, got it. And then they'll text me back. So here's my take on it. I used to believe that voice memos were rude because it takes more time for the listener to listen and it's way convenient for me. But I've kind of changed my stance now because I drop a lot of voice messages. It includes my intonations, my voice, my vibe. and I'm basically, I can tell a story too to get them convinced, right? Whereas I can't do that with a, just typing everything out. So I used to care about, hey, like it's equal for me.

12:58If I typed it out and you read it, it's the equal pain, right? Now I'm like, no, screw that. Sometimes I need to communicate a story and it's way more effective if I send a voice memo. So I have backtracked, especially in business now, I think voice memos are good, but I will never send a voicemail to you, memo to you. You've never sent one to me either. Like I won't do that. I don't mind voice memos. If you have something to say like a story, it's the right time, right place to send a... The worst is with dating, when they send me 10 at a time, I'm just like, dude. So when you're dating people in today's world, keep in mind I haven't been in the game for a long time, you're saying someone would just send 10 voice memos?

13:35They're used to, because in different cultures, right? They're used to just like, sometimes I'll look at their texts, it's all voice memos. But why wouldn't they just send one voice memo? Because they have a lot to say. So yeah, that's my point. But in business, we have to be concise. so but i'm just saying my point is like i'll send videos on friday like before i came here i recorded a video saying hey here's how we're turning towards a mission right now here's what we're working on here's like i think it's important for people to see the leader and to hear from the leader as well so yep my problem is i'm i'm really like audio like a phone real time or facetime type of person where i'm just like let's just go and solve this right now if it's important If not, I don't care to deal with it because if I don't need to deal with it right now, it's not that important where it's going to impact the business much and someone else can handle it.

14:24But if it's super important, I just want it solved right now and I don't care. And I just rather get it on the phone over a voice memo. Yeah, it certainly gets things done faster, but there's always trade-offs too, right? Obviously, sometimes you might try to push something and then you realize, oh crap, I should have slowed down maybe. What percent of the time has that happened to you? That I realized I should slow down? Uh-huh.

14:44uh be honest be honest yeah yeah i'm actually gonna be honest it's not the answer you're looking for though i'm not looking for any answer no you really like percentage of time where i should have slowed down uh-huh i look at a zero okay i push and i don't realize i should slow down because my nature is just push push push and not let go yeah and then they'll tell me I need to slow down or I'm pushing too much. And do you? I do. But I usually, my personality type is I'm gonna push really hard and then people will tell me when I'm wrong versus I don't know how to not push. That is a weakness of mine to not understand that.

15:26But I tend to push and I don't know how to stop pushing. You know what's interesting? So I'm similar, right? Obviously we have similar personalities and I push and especially we push ourselves really hard. And I think I used to care a lot more when people were, they're just like, people are like, oh my God, it's too fast for me, I can't take it, right? Now my mindset is like, hey, maybe it is too fast for you and it's okay, maybe we can work on something where maybe you adapt or maybe, well, let's help you find something else. But my mindset before was like, oh, I'm gonna try to change my personality.

15:58Whereas you always just had the same personality. I'm just like, as we get older, I'm like, I just can't change it. No, but years ago, People did tell me I pushed too much and I should try to slow it down. Did Camo tell you that too? No, he never really told me that. Camo would tell me I changed my mind too much. That was a big problem in business. And I think I've been really good about not changing my mind in business, but you know, my personal life. Yeah, you're either bad in personal or business, not both. Yes, but my personal life used to be good. Now my personal life, I changed my mind a lot.

16:31Business, I'm much better. You agree with that, right? Yeah. I mean, I'm pretty consistent. At least my executive team tells me. You got pretty bad with acquisitions. You started to get a little shaky with the acquisition, but then I think right now it's pretty good. No, acquisitions, we were pretty picky. You've been doing a lot for a while. No, but even then, we've been picky on what we actually signed. And our diligence process was so long. None of our acquisitions actually failed. So that actually protected you from being too fast because the diligence was so long. Acquisitions, none of them were ever fast.

17:01They were always slow just because of the process. and it was to protect our capital because you make a mistake like that and you spend tens of millions of dollars or even millions. The time. The time. Yeah. But we had an acquisition team, so them spending the time, that's part of their job and that's what our acquisition team does. They should be spending the time on that and that's why we got one. Yeah. But what I found back in the day, people would be like, oh, you're pushing too hard. People are going to quit. You're going to irritate them. you're going to make mistakes the organization you know when you push people too fast that's when it costs you a lot of money and what i found is when i slow down on pushing i notice a direct effect of not growing as fast just hands down because i can't understand just this is just me this is one of my faults i can't understand when to push and when not to push what i found works better is just to push.

18:02And the executive team or my co-founder will tell me it's too much or they'll tell people to just ignore me and that, and they're like, oh, we'll talk to Neil. And that has been, I wouldn't say a balance on my end. It's been a balance for the organization because I have other people who will get in the way and stop the pain that I may cause from pushing too much. You know what they call that? In the wrong area. They call that managing up. So people know how to work with you now. Now you have enough scale where it's like, yeah, they know how to tell other people how to manage up and manage your personality, basically.

18:34That's managing up. Correct. So they'll say, I'm pushing too much. But if I believe my push is the right method, I remember when we were trying to expand globally, they're like, you want to expand to how many countries, how fast? They're like, this is going to be expensive and dirt. This is too fast. We don't recommend it. I push and I push more than what my team wanted. And I got less than what I wanted. So there was some sort of balance there, but I pushed and I did not care. And it's paying off today. And if I had to go back, it would have been more painful than they were right on that. I would have pushed for more knowing what I know now back then, because it would have created a bigger organization in today's world.

19:15So you're saying if you go back in time, you would have pushed even harder, even though you kind of regretted pushing that hard. uh-huh yeah because and and i get why my management team was like you can't just keep pushing it's a really expensive endeavor that you're about to embark i would have personally figured it out yeah well it's also it's your money too yeah yeah that is it for today and we'll see you tomorrow