Opinion: AI has torn up the rule book of competitive advantage, argues Kim Teo, co-founder and CEO of me&u. Founders will need to focus on AI-proofing their moats instead.
AI has killed the technology moat faster than anyone predicted. What took two years and a specialist team can now be prototyped in a week. That changes everything about how companies need to think about competitive advantage.
I’ve been thinking about moats a lot lately because the rules have fundamentally changed. The defences that an entire generation of founders built their strategies around are gone. And the ones that remain are harder to see, but more durable than anything that came before.
Let’s start with what no longer protects you.
The 3 moats AI killed
1. Domain knowledge
It used to take years to develop deep enough expertise in an industry to build something meaningful inside it. That knowledge gap was a genuine barrier; it kept competitors out and gave incumbents time.
Now AI compresses that learning curve to weeks. Any well-resourced team can onboard the context, the language and the institutional knowledge of an industry faster than you can defend it. If your edge is knowing your industry better than the next person, assume that edge is shrinking every day.
2. Product features
If your moat is a feature, even a sophisticated, technically complex one, assume it has a six-month shelf life. AI accelerates product development so dramatically that differentiation at the feature level is temporary.
Build great features, absolutely. Ship fast, yes. But don’t mistake a product advantage for a durable moat. Someone is building the same thing right now, probably faster than you think.
3. Brand and reputation alone
This is the uncomfortable one because brand still matters enormously. I’ll come back to that. But brand as a standalone moat is just aesthetics. Consumers can love you and still leave the moment a better-personalised, more relevant experience comes along. Affection without structural lock-in isn’t a moat. It’s goodwill, and goodwill doesn’t hold like it used to.
The 3 lasting moats
1. Compounding data moats
The reason it’s genuinely hard to leave Spotify or TikTok isn’t the interface. It’s because those platforms have spent years learning exactly who you are. Furthermore, that knowledge makes every interaction better than any alternative could be from day one. The data compounds. The switching cost grows invisibly, interaction by interaction, until leaving feels like starting over.
For us, that looks like our “For You” feature. It creates a taste profile for every guest based on their entire order history across our network, making menu recommendations and surfacing trending drinks.
No competitor can buy your dataset. They must earn it, one transaction at a time over many years, across millions of users.
2. The consumer network effect
This is where brand love stops being aesthetics and starts being a real structural moat, but only when it generates network effects. For example, when customers love your product enough to bring other people into it, you’ve built something that compounds on its own. That’s a fundamentally different thing from being well-regarded.
Building a product that your customers want to use, talk about and share with friends becomes an active demand engine. Every share, every recommendation, every save pulls new people into your product ecosystem. Brand love that generates network effects is a growth mechanism that gets more powerful the larger it gets.
3. Commercial partnerships that are hard to replicate
Partnerships that sit at the intersection of trust, reach and complexity are a great moat and it’s exactly what makes them defensible.
Companies spend years building these partnerships, earning trust and creating advantages that competitors can’t replicate overnight. These aren’t partnerships you win on the strength of a pitch deck. They come from scale, from a proven consumer base, and from the kind of commercial credibility that only time and performance can build.
The earned relationship with customers
Across all three sustainable moats, the common thread is the same: they require time, trust and real human behaviour at scale. AI can accelerate almost everything in your business. Product, content, operations, analysis. What it cannot manufacture is the earned relationship that makes millions of people willing to keep telling you who they are.
A business that has spent years building trust with their customers – and also has data about those customers that is hard to come by and can’t be spat out by an AI prompt – is invaluable.
It can be easy to be overwhelmed by the rate of change in this new AI-powered world. Some moats are dying, others are strengthening. The founders who understand the difference won’t be left behind.
Kim Teo is the CEO and co-founder of data and CRM hospitality platform me&u.
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