Moat Definition

Position in HORIZON workflow: v0.2 Competitive Landscape → v0.3 Moat Definition → v0.3 Pricing Model Selection

Moat Type Taxonomy

Every moat falls into one of six types. Identify primary + secondary moats per competitor:

| Moat Type | Definition | Strong When | Weak When | |-----------|------------|-------------|-----------| | Switching Costs | Friction to leave (data, workflow, contracts) | Multi-year data, deep integrations | Easy export, monthly contracts | | Network Effects | Value increases with users | Two-sided marketplace, content platform | Single-player tool, linear value | | Data/IP | Proprietary data or algorithms | Unique training data, patents | Commodity ML, public datasets | | Brand/Trust | Recognition, credibility | Regulated industry, high-risk decisions | Low-stakes, undifferentiated | | Scale/Cost | Volume economics | Infrastructure-heavy, marginal cost near zero | Labor-intensive, linear cost | | Regulatory | Compliance barriers | Certifications required, government contracts | No compliance requirements |

For micro-SaaS: Switching costs and brand/trust matter most. Network effects and scale rarely apply.

Moat Strength Tiers

Rate each competitor's defensibility:

| Tier | Criteria | Evidence Signals | Targeting Implication | |------|----------|------------------|----------------------| | Impenetrable | Multi-layered moat, 10+ years data lock-in | "Would take years to switch" | Avoid direct competition | | Strong | Significant switching friction, 1-2 year contracts | High NPS + low churn despite complaints | Target underserved segments only | | Moderate | Some friction, workarounds exist | Churn 5-10%, export options | Wedge opportunity exists | | Weak | Easy to replace, commodity offering | Monthly plans, high churn, price shopping | Direct competition viable | | Eroding | Former strength declining | New alternatives gaining share | Aggressive targeting |

Gate rule: Don't compete where incumbent has Impenetrable or Strong moat unless targeting segment they explicitly ignore.

Switching Cost Inventory

Quantify ALL switching costs — the sum determines moat strength:

| Cost Type | High Impact | Low Impact | How to Assess | |-----------|-------------|------------|---------------| | Financial | >6mo contract, early termination fees | Monthly billing, no penalty | Check pricing page terms | | Time/Effort | 40+ hr migration, retraining | <4 hr setup, familiar UX | Trial the competitor | | Data Migration | Proprietary format, no export | Standard export (CSV, API) | Test export function | | Workflow Retraining | Unique methodology, team habits | Standard patterns | Read onboarding docs | | Integration Rework | Deep API dependencies | Standalone tool | Map their integrations |

Calculation: Sum hours + dollars. >$5K or >40hr = material switching cost.

Targeting Decision Framework

Use moat analysis to determine where to compete:

Moat Impenetrable/Strong → DON'T COMPETE HERE
                          ↓ unless
                          Target ignored segment (SMB, specific vertical)
                          
Moat Moderate → WEDGE STRATEGY
                ↓ identify
                Entry point that bypasses switching friction
                
Moat Weak/Eroding → DIRECT COMPETITION
                    ↓ execute
                    Feature + price attack on their core

Wedge Opportunity Signals

A wedge exists when:

Competitor moat doesn't apply to specific segment
One feature has LOW switching cost (can start there)
Integration allows coexistence (not replacement)
Price sensitivity > switching friction

Analysis Workflow

Step 1: Pull Competitor Data

Retrieve CFD- entries from v0.2 Competitive Landscape. For each competitor, you need: pricing, complaints, feature set.

Step 2: Identify Moat Type

For each competitor, determine primary moat type. Use evidence from reviews, pricing structure, integration depth.

Step 3: Rate Moat Strength

Apply tier criteria. Flag if insufficient evidence (Tier 4-5 confidence).

Step 4: Inventory Switching Costs

Complete the 5-category switching cost assessment. Quantify hours + dollars.

Step 5: Identify Vulnerabilities

Where is their moat weakest? Which segments do they ignore? What's eroding?

Step 6: Generate IDs

CFD entries (customer_feedback.md): Template: assets/cfd-moat-analysis.md

CFD-MOT-###: [Competitor] Moat Analysis — [Moat Type], [Strength Tier]

BR entries (BUSINESS_RULES.md): Template: assets/br-targeting.md

BR-TGT-###: [Targeting Rule] — based on [Competitor] moat weakness

Anti-Patterns to Avoid

| Don't | Do Instead | |-------|------------| | "They're big" | Specify which moat type + evidence | | Assume low switching cost | Quantify: hours + dollars | | Only analyze direct competitors | Include Type 4-5 (workarounds, inertia) | | Underestimate integration moat | Map actual dependency depth | | Ignore eroding moats | Track signals: new entrants, complaints | | Target where moat is strong | Find the segment where moat doesn't apply |

Output Requirements

Before advancing to Our Moat Articulation:

[ ] ≥3 competitors with moat type identified
[ ] ≥2 competitors with switching costs quantified
[ ] Moat strength tier assigned (with evidence)
[ ] Targeting decision per competitor (compete/avoid/wedge)
[ ] CFD-MOT entries created (≥3)
[ ] BR-TGT entries created (≥2)

Downstream Connections

| Consumer | What It Needs | Format | |----------|---------------|--------| | v0.3 Our Moat Articulation | Where competitors are weak, what moats work | CFD-MOT entries | | v0.3 Pricing Model | What price points bypass switching friction | BR-TGT entries | | v0.5 Red Team | Risks of competitor response | Moat strength tiers | | v0.9 GTM | Positioning against competitor moats | Targeting rules |

Detailed References

Good/bad examples: See references/examples.md
CFD-MOT template: See assets/cfd-moat-analysis.md
BR-TGT template: See assets/br-targeting.md