Distribution Moat

Definition

A competitive advantage based on how easily you can reach customers. Spoiler alert: most startups don't have one and never will.

Example Usage

Our distribution moat is that we're on Twitter and also we emailed some VCs once.

Origin

Business strategy terminology, popularized by Ben Thompson

Fun Fact

VCs obsess over distribution moats because it's the one competitive advantage they can't measure with a spreadsheet.

Source: Startup strategy and competitive advantage terminology

Related Terms

Beginner

Wantrepreneur

Someone who talks about starting a company the way other people talk about going to the gym -- constantly, passionately, and with absolutely no intention of following through. Their startup is always launching next month, and next month is always next month.

🚀 Startup / VC

Intermediate

pro rata rights

The sacred privilege granted to investors allowing them to maintain their ownership percentage in future funding rounds by ponying up more cash. It's like a VIP pass that lets you keep throwing money at a company before it becomes wildly successful or spectacularly flames out.

🚀 Startup / VC

Beginner

distribution

The return of capital to limited partners when a fund exits an investment, either as cash or occasionally as stock, representing the magical moment when paper gains become real money. The VC equivalent of actually getting your lottery winnings instead of just holding a ticket.

🚀 Startup / VC

Beginner

advisor

Someone who receives equity for occasionally responding to emails and allowing you to use their name on your website. The advisor-to-impact ratio is the lowest in all of business, yet every startup has seven of them.

🚀 Startup / VC

Beginner

deal flow

The rate at which investment opportunities come across a VC's desk. Good deal flow means seeing quality startups before everyone else; bad deal flow means getting pitched by anyone with a Squarespace website and a dream.

🚀 Startup / VC

Intermediate

moated

Surrounded by a protective water-filled trench, which in business parlance describes a company with such strong competitive advantages that rivals can't touch them. Warren Buffett made this term famous by obsessing over companies with "economic moats" that defend market share like medieval fortifications. These days, everyone claims they have a moat, but most are more like puddles.

🚀 Startup / VC

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