Your Brand is Your Economic Moat
“In Business, I look for economic castles protected by unbreachable moats.” — Warren Buffett
In a lecture to Notre Dame MBA students in 1991, Mr. Buffett talked about the textile business. He says it took him over 22 years to figure out it wasn’t a very good business. Mr. Buffett claims Berkshire Hathaway made over half the men’s suit linings in the United States at one point. If you wore a men’s suit there was a pretty good chance Hathaway made the lining. Sears even went on to vote Berkshire Hathaway ‘Supplier of the Year’. BUT, he adds, Sears wouldn’t give him another half-cent a yard (pricing power). Mr. Buffett says nobody goes into a men’s clothing store and asks for a pin striped suit with a Hathaway lining.
This anecdote drives home the power of branding. After all, when was the last time you walked into a store and asked for a ‘Soda’?