Thread by @sajithpai

Tailwinds > Moats.

A thread.

Worth noting that when Softbank acquired ARM in ‘16, both NVidia and ARM had similar market cap - in the early $30bns. Now Nvidia is at $300b and ARM is being acquired for $40b!

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theverge.com/2020/9/13/2143…

Nvidia has perhaps been amongst the biggest beneficiaries of rise of ML, self-driving cars, gaming where their GPUs have come in handy. As the need for compute power grew Nvidia found itself on the right side of ML tailwinds.

Whereas ARM, a virtual monopoly has languished.
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Sure, there have been perhaps management issues at ARM etc. And the comparison isn't exactly like to like. But if there is a takeaway here, it is that riding tailwinds is perhaps far more important than having moats.
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Every pitchdeck and VC asks for moats, but no one talks abt tailwinds and riding them. Buffett thought of moats because the brands he invested in were growing at a measly 3-4%. Moats mattered there for pricing power. For venture and startups, moats matter zilch.
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What matters instead is being on the right side of tailwinds. And if you can - picking the tailwinds to ride on.

For Milkbasket and Dunzo the moat hasn't been as important as COVID’s immense tailwinds.

Edtech has no real moat* - it has fierce tailwinds at its back though.
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* brand and customer data are decent moats if you grow to scale, i will confess.
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So, let us not obsess unduly over moats. Being on the right side of trends or tailwinds is often more important than having moats or being a monopoly.

Tailwinds > Moats.

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