Moats vs. moonshots: The Warren Buffett-Elon Musk style debate
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- Elon Musk called moats 'lame' during Tesla's Q1 2018 earnings call when asked about opening Superchargers to competitors, arguing 'what matters is the pace of innovation' as the fundamental determinant of competitiveness.
- Warren Buffett fired back at Berkshire Hathaway's shareholders meeting days later, conceding Musk 'may turn things upside down in some areas' but joking he wouldn't want to take Musk on in candy.
- Musk responded on Twitter claiming he was 'super super serious' about starting a candy company and building a moat 'filled with candy' he called 'Berkshire Hathaway kryptonite.'
- Buffett defended the moat concept on CNBC two days after the meeting, arguing Snickers, M&M's, and Hershey's have unbreakable moats because consumers will cross the street to get a named brand rather than buy a cheaper substitute.
- Buffett also named WD-40, Elmer's Glue, the iPhone, Costco, and Amazon Prime as products with strong moats, noting Amazon can raise Prime prices 20% because of its brand image.
- The eight-year-old debate was picked up by Harvard Business Review and continues to generate online posts and videos, while the CNBC exchange resurfaced this week in the Warren Buffett Watch newsletter.
- GEICO deployed its Gecko mascot as a 'real-time, AI-powered participant' on a WNBA video podcast hosted by Dallas Wings guard Azzi Fudd, the character's first 'live, unscripted conversation' under a multiyear partnership.
Why it matters: Musk's 'innovation beats moats' thesis faces fresh scrutiny as Tesla was reportedly weighing new financing days after saying it wouldn't need any, which Buffett called a 'counter-revelation.' For Berkshire, decades-old brands like Snickers can charge premium prices; Amazon proved it can raise Prime 20% and keep subscribers — a moat theory $397.4B in cash still backs.
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