The idea of “moats” is appearing more and more investment decks. It also pops up regularly in investor queries.

Investor Warren Buffett popularised the term “economic moat”.

This works very well for Buffett’s portfolio companies such as Coca Cola, Kraft Heinz, Chevron and Procter & Gamble – well-established companies who are more interested in predictable returns.

Why do you want a moat?

Warren Buffett’s companies are not looking for explosive growth. They want to protect their inbuilt advantage.

Moats are good for that.

The limitations of a moat

A moat around a castle will only work if the castle is self sufficient, with enough supplies to support the inhabitants for a prolonged period.

Because, while a moat will keep out invaders, it also imprisons the inhabitants.

Moats and IP strategy

The IntaVal approach to IP strategy is to examine the moat that the client is trying to build. Usually, it has been constructed without much thought.

It may not fulfil its aims.

After putting order on the moat, we think about drawbridges, tunnels and toll bridges.

In other words, we let you develop more ways to:

• collaborate
• attract and motivate talent
• monetise your intellectual capital

A founder in a high-growth company is usually characterised by courage and fearlessness.

How much protection do you need?

A founder in a high-growth company is usually characterised by courage and fearlessness. Maybe “protection” is not even in your vocabulary.

Before you consider investing in IP protection, consider your ambition, capabilities and advantages:

• If you are scaling rapidly, you can innovate faster than anyone can copy you.
• If you are executing well, you will serve customers better than copycats ever can.

A moat for a rocket? That is ridiculous

It is interesting to see how Jeff Bezos, Elon Musk and Richard Branson are all associated with rockets.

After all, if your business is a rocket, how important is a moat?

If you are building a rocket, perhaps you want a moat to protect the launchpad. Then you just make sure that the rocket has enough fuel to take you out of this world.

About the author:

Raymond Hegarty is an IP strategist, author and speaker. He is an IP coach to CEOs and CFOs of high-growth technology and life science companies.

He is the author of three bestselling books on IP strategy and has spoken to tens of thousands of people on topics of innovation and intellectual property. IAM Magazine has recognised him as one of the world’s top 300 IP strategists every year for the last 10 years.

He is the CEO of IntaVal, a leading global IP strategy consultancy.