Moats – What One-Person Coding Startups Can Learn From Warren Buffett

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Warren Buffett emphasizes building a business with a strong “moat,” or barrier to entry, likening it to an economic castle. For coding businesses, increasing this barrier involves enhancing skills, investing more money in high-ROI activities, and dedicating focused time. This approach, as Buffett suggests, makes a business more robust and profitable.

I just watched the 2000 Berkshire Hathaway Annual Shareholder Meeting because I was interested in how Warren Buffet commented on the burst of the Internet Bubble.

Warren Buffet thinks of each business as an economic castle. As a businessman, he wants to create businesses with a large “moat” — the protection against “enemies”.

If you are starting your own coding business, it’s an important question for you, too:

How can you increase the barrier of entry to your coding business?

In a recent video, I talked about different ways of increasing the barrier of entry if you are currently creating your first coding business.

How to Create a Barrier of Entry Running a Software Business

In principle, there are only a few general ways of increasing the barrier of entry. Each of them will make your business more robust, increase the “moat” of your business, and increases profitability:

  • SKILL: Increase your skill-level at your core business activity. If this is coding, move from being among the top 50% of coders to the top 40% to the top 30%. Each time, you move to the right, you’ll increase profitability not linearly, but exponentially!
  • MONEY: Invest more money in your business (and invest into the things with highest ROI). The more money you’ve invested in high-ROI activities (such as product creation and investing in your own skills), the higher the protection against other businesses.
  • TIME: Invest more time in your business than anyone else. That’s why you need to focus on one business at-a-time. If you invest your time in two businesses, you’ll get destroyed by the focused people in both areas.

Do you want to learn how to build a thriving coding business from scratch (without much coding or business knowledge)?

Check out my Python coding business course! It may easily be the the best investment you ever took. I’m serious: another well-known Warren Buffet insight is that investing in your education provides much higher ROI than any publicly traded stock.

โ€œUltimately, thereโ€™s one investment that supersedes all others: Invest in yourself,โ€ Buffet argues in a recent Forbes interview. โ€œNobody can take away what youโ€™ve got in yourself, and everybody has potential they havenโ€™t used yet.โ€Warren Buffet