INSUBCONTINENT EXCLUSIVE:
Authors: JordanBy Katherine Chiglinsky, Noah Buhayar and Sonali BasakElon Musk recently took aim at the idea a successful business needs a
“moat” -- a competitive advantage that keeps rivals at bay
The pace of innovation, he said, is more important in the long run.
On Saturday, Warren Buffett and his business partner, Charles Munger,
shot back.
“Elon says a conventional moat is quaint, and that’s true of a puddle of water,” Munger, 94, said
Warren does not intend to build an actual moat
Even though they’re quaint.”
Munger and Buffett, 87, were responding to a question at Berkshire Hathaway Inc.’s annual meeting about
Musk’s comments this week
The pair often talk about trying to expand the “moats” around their businesses.
“First of all, I think moats are lame,” Musk said
during an earnings call for his Tesla Inc
“They’re like nice in a sort of quaint, vestigial way
But if your only defense against invading armies is a moat, you will not last long
What matters is the pace of innovation
That is the fundamental determinant of competitiveness.”
While Buffett said it does seem like more moats have become susceptible to
invasion recently, he still observes plenty of companies, such as the See’s Candies unit that Berkshire owns, where they’re holding
firm.
“Elon may turn things upside down in some areas, I don’t think he’d want to take us on in candy,” Buffett quipped
“There are some pretty good moats around.”
Musk didn’t stay silent
“I’m starting a candy company it’s going to be amazing,” he wrote in a Twitter post Saturday, responding to Munger’s remarks
“I am super super serious.”
He followed up with another tweet: “Then I’m going to build a moat fill it w candy
Warren B will not be able to resist investing! Berkshire Hathaway kryptonite …”
And then: “Saying you like ‘moats’ is just a nice
way of saying you like oligopolies.”
