Good businesses don’t need moats (and why that’s fine)

Every pitch deck has a moat slide. Every investor asks about it. Founders spend weeks agonizing over how to frame their defensibility. And I think the whole conversation is mostly wrong.

The truth is: most great businesses do not have a true moat, and they are still great businesses. The obsession with moats is a VC narrative, not a business reality. It comes from a venture industry that needs winner-take-all stories to justify the math of a fund that needs one portfolio company to return the whole thing.

The WordPress example

WordPress runs something like 43% of the web. It has created an estimated $44 billion economy of developers, agencies, hosting companies, and plugin builders. The company behind it, Automattic, makes around $800 million per year in revenue.

Is there a moat? Not really. Anyone can spin up a WordPress site. Anyone can build a competing hosting service. The code is open-source. The plugins are open-source. The barriers to entry are essentially zero.

And yet, the business is real. It is large. It compounds. Year after year, it grows. Not because it is defensible in the VC sense, but because it has execution, distribution, brand, and customer relationships that compound over time.

Consultancies are the counterexample that proves the point

McKinsey, Deloitte, BCG, Bain — these are massive, profitable businesses. They are also, at the core, indistinguishable from each other. They hire from the same schools. They use the same frameworks. They compete for the same clients. There is no technology moat, no network effect, no data advantage.

And yet, they are some of the most durable businesses in the world. Why? Because they have execution, brand trust, and relationships that take decades to build and are not easily replicated. These are not moats in the Warren Buffett sense. They are something more mundane and more real.

What actually matters

If you are building a real business — not a lottery ticket, not a flip — the things that matter are:

• Execution velocity. Can you ship faster and better than everyone else?
• Distribution. Do you have a channel that compounds? Referral loops, content engines, sales relationships.
• Brand. Do people trust you? Would they recommend you?
• Customer relationships. Do they stay? Do they expand? Do they churn less than your competitors?
• Operational excellence. Are you running a tight ship? Do you have real margins?

None of these are moats in the traditional sense. They are not defensible in the way a network effect is defensible. But they are real, and they compound. A business that does all of these well is a business that will outlast most of its competitors, even if a well-funded copycat could, in theory, replicate every feature.

Moats are for the winner-take-all story

True moats exist. Network effects are real. Data flywheels are real. Scale economies are real. But they are the exception, not the rule. They are the condition for a venture-scale outcome, not the condition for a good business.

The problem is that the startup world has internalized the VC frame so deeply that founders think they need a moat or they are not building anything real. This is wrong. It leads to bad strategy: chasing defensibility at the expense of actually building something people want.

Where this lands for Kortix

Kortix is open-source. Anyone can clone the repo. Anyone can self-host. Anyone can build a competing product. There is no moat in the VC sense.

But the cloud business is real. The brand is real. The open-source community is real. The customer relationships are real. And most importantly, the data flywheel is real — every company that uses Kortix builds a compounding advantage that belongs to them, not to us. That is not a moat around Kortix. It is a moat around our customers.

That is a better trade. We would rather build the platform that makes every customer stronger than build the fortress that keeps everyone out.