Here is a review and summary of the book, 7 Powers by Hamilton Helmer, by blogger florentrivello.com. I had read that Netflix CEO Reed Hastings was a big fan and I then heard Helmer on the Invest Like the Best Podcast and made a mental note to buy the book. This review and summary may well be a good short cut to the book which is on my list and I am grateful to my Twitter friend, Hurricane Capital, for highlighting.
One example: in our How to Pick Winning Stocks course (coming soon on our website), I was perhaps a tad dismissive of economies of scale as a moat, as I don’t see these as being necessarily enduring in most cases. The advantage conferred by truly large scale is obvious, particularly in the retail sector where Walmart naturally has a big buying advantage, but more broadly scale economies are usually replicable and don't meet my criterion for a moat, which should be enduring.
He also illustrates the weakening power of brands in the internet age. First, in the past, brands had the power to push retailers to allocate them scarce shelf space, whereas the internet theoretically has infinite shelf space. Second, brands assured consumers of quality by expensive advertising campaigns, whereas today the internet allows the direct connection of consumer to consumer, short-circuiting the ad spend. The nature of brands' moats is certainly changing.
I plan to buy Helmer’s book and review it later in the Book Club.