Most startups are founded with no moats. But the best ones can prove moat by induction.
Induction is a simple mathematical way to prove statements. An example: Can you climb a ladder to the top?
- Base case
n=0– Can you get on the bottom rung of the ladder? - Induction step (given
n=k, proven=k+1) – At a given rung, can you climb up to the next rung?
Moat by induction can manifest in many ways. Take network effects:
- Is your product valuable to a single user (
n=1is the base case). - With
n=kusers, how much more value does a customer get withn=k+1users?
Sometimes it's about solving zero to one and then one to n.