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Which matters more: “moats” or innovation?
When Tesla CEO Elon Musk said that “moats are lame” during the company’s earnings call last week, he was calling out Warren Buffett, the chair of Berkshire Hathaway, who uses “moat” to describe barriers to imitation that stave off competition. “If your only defense against invading armies is a moat, you will not last long,” Musk continued. “What matters is the pace of innovation — that is the fundamental determinant of competitiveness.” In response, Buffett defended the idea of moats at Berkshire Hathaway’s shareholder meeting, which prompted satirical tweets from Musk.[...read more]