In the AI era, the moat is remembering the customer
Investor Jason Calacanis says attentive service and small free improvements create loyalty no competitor can clone.
This Week in Startups · Binance Hacked $6.3B Stolen, DoorDash Buys Instacart For $17B, Jake Newfield from Hermetiq, + More!Jake Newfield, the co-founder and chief executive of Hermetiq, an AI startup that analyzes software builds, had just explained why investors worry that a big AI lab could copy any startup overnight. Investor Jason Calacanis, who backs the company, was asked how a founder should answer that question.
His answer was short. As Calacanis put it: "I think the new moat is that you're relentless and that people trust you, and that would fall under brand."
What he meant, he argued, is not a patent or a technical trick. It is being so attentive that the customer sees no reason to leave, even if a rival offers the same feature. A founder wins, in Calacanis's view, by "thinking about what the customer needs before they even know they need it."
His example was dinner. When Calacanis walks into Boa Steakhouse in Austin, he said, the staff asks if he wants Alaskan king crab and a West Home New York strip cooked medium rare. They send over the same waiter each time, even if that waiter is working another section, and nine times out of 10 they seat him in his favorite booth. Most people would say that is not a real moat, Calacanis said, because it is not technical. But how you make the customer feel, and the sense that you are paying attention, is everything if the price is fair and the product makes them more efficient.
He learned the same lesson from coffee. He loves the chicory coffee from Cafe Du Monde in New Orleans, a rich and nutty blend cut with chicory bark. He buys the orange vacuum sealed cans, and at one point tried to save money by buying chicory and mixing it himself. He said he could have saved 50 percent, but he could not get it right, and he missed the pleasure of opening that can. He now happily pays about $10 for 12 or 15 ounces.
Calacanis believes Tesla and Apple work the same way. A Tesla owner wakes up to a free over the air update that adds Apple Music or Spotify, scans a code, and feels the car got more valuable. The company, he said, does not charge extra for the improvement. It just makes the owner love the brand more.
Questions people ask
What does moat mean for a startup?
In business, a moat is whatever keeps customers from leaving for a competitor. It was traditionally a patent, exclusive data, or high switching costs. Calacanis is arguing that trust and attention can function the same way.
What does Jake Newfield's company actually do?
Hermetiq builds an AI assistant called Barn Owl for software build systems. When programmers write code, it must be compiled, tested, and verified, and Hermetiq studies millions of those builds to find failures faster. One top AI lab pays the company $240,000 a year to analyze more than two million builds per day.
Why would anyone put chicory in coffee?
Chicory is the roasted root of a plant related to endive, ground and mixed with coffee. It became popular in New Orleans, where French settlers stretched scarce coffee with it, adding a nutty, slightly bitter richness. Cafe Du Monde, a famous cafe in the French Quarter, sells its blend in orange cans.