5 Moats Every Investor Must Know (SIM members)

and I think we're underway I hope we're underway all right I see people entering the chat so I I think we're underway

welcome to the webinar on the five Moes that every investor needs to know and to get things started why don't you head on over to the chat let us know where you're coming from because that's one of

the most fun things about these webinars is we get people from all over the world we'll take a second to introduce ourselves my name is Brian stoel I have

been a financial analyst for coming up on 15 years work for the mle fool I've been doing a lot of work for long-term mindset and I am coming to you from Milwaukee Wisconsin and and I'm G to

kick it over to Ken But Ken I see we've got as dispersed as India London Atlanta Brazil Germany Chap Hill Colombia Israel

man all right Ken sorry take away all right hey my name's Ken uh I have a masters in accounting and I am coming in from nevado California that's about 30

miles north of San Francisco and I've been investing for for a few years and that's all I have for now happy to have Ken with us you're G to hear from him a

bunch two others that are going to be helping out with the chat and the Q&A a little bit they're going to be involved later on but we want to introduce um I see Mr with you got your camera on so

Brian you want to introduce yourself hey yep um I'm I'm actually the third Brian of the Brian um and then Ken is the fourth Brian um but yeah I've been

investing since 1998 and um been part of long-term mindset for a couple years now and um kind of work the back office stuff as well as our premium community

so um excited to have you here wait did you say where you were in oh I'm in Chapel Hill I was I was looking to see who posted Chapel Hill so I was going to yeah all right M faldi wrap us up hey

everyone Brian faldi Financial educator been buying and selling uh buying so buying and selling businesses for 20 years now I am uh of the three Bran's

one that is classically trained um in in finance and I'm the author of this fabulous book why does the stock market go up but this is a st's event but I will be in the chat good to see some

people from Connecticut though in the chat yeah and you know I I saw someone this will nothing to almost everyone someone from White Fish Bay Wisconsin and I'm in shood Wisconsin there are

Arch Rivals but I won't hold it against you for today um all right Ken people are here because they want to learn

about this the five Moes that every investor should know and the reason that we chose this and I don't know about you Ken but for me when I got started

investing right around during the great financial crisis I it would have saved me me so much time and energy and money if I would have known this that's why we chose this was that similar for you yeah

you know I I started later in my investing Journey um I didn't start investing in individual stocks till a couple years ago but I had two green days and then all of a sudden we were in

a bare market and um I really wish I had something like this uh when I first started because this is actually what I was missing and it's the reason why my

portfolio was down 50% really quickly all right so before we get started on this really important lesson we just had you guys all typing in the chat now we're going to screw everything up but that's okay we like to see if people can

be nimble here so Ken what's the first thing we got to remember all right first thing if you need to adjust your volume if you go to the lower uh left on your

screen there's a little up Arrow next to the mute button uh or your audio settings button and then in there you can select audio settings and you can adjust your volume of up or down and

also as a reminder a replay of all of this and the key slides at the end are going to be emailed at the end so if you are a furious notetaker like myself you will get a second chance to go through

this so don't worry too much about that uh now second this is important because we used the chat to start to say where you're from the chat will not be open

for questions and because we've got so many people this the demand for this was way higher than we've had before we're not taking any questions verbally so Ken

how can people ask questions all right if you have a question go to the lower part of the screen there's a Q&A uh icon click on that and then pop your question

in there and we will get to it in good time all right so all that being said let's start today's lesson on the five Moes that every investor should know now

every time we teach a lesson we do this because I used to be a middle school teacher and this is what we had put on the board every day I will be able to iwb and the idea is is that everyone

here should be able to do this by the end of the session if you can then we think it was worth your time and so for today it's you will be able to identify

each of the five different Moes and give examples of publicly traded companies that have each of these five Moes but before we get started I have a question

we have a poll you can answer the poll we're going to see what it come up as and the question is how familiar are you with the concept of a moe so Ken if you

can put the poll up there let's get a little bit of feedback and we'll give everybody about 15 seconds and this poll will pop up and we'd like to know how

how how familiar are you with the concept of aote so we'll just wait a little bit we'll let people let us know what they know

and Ken I don't have a timer so when it hits about 15 seconds you let me know and you can I can't take it down actually I think you might have to be

the one who I'll end it in two one all right and can you share those results because I don't have all right look at that this is great so not many people

say that they're an expert and then the majority say they're familiar or vaguely aware well that's fantastic because this is such important concept and I wish it

was the first thing that was ever taught about it so let's talk about Moes and to talk about modes Ken we're going to tell a little story and it's a fictional

story of course and it's a story where we find Life on Mars in fact we find Advanced societies on Mars and I decide to go to Mars and I bring some apples

with me because guess what can they have no apples on Mars none whatsoever and I get there and people are eating up these apples like crazy and they are willing

to pay top dollar and of course I name my apples sto's best and so sto's best makes a ton of profits and I say to

myself this is fantastic I'm staying on Mars forever this is great out of curiosity you got a favorite type of apple can uh red delicious I'm I'm a

Macintosh guy myself and not just because that was what Steve Jobs's first computer was oh but then hard times hit because I didn't come alone I came with some

others and they saw my success Ken he's a traitor he's a backstabber he's like Brutus he stole some of my apples planted some in that

Martian soil and all of a sudden he started selling apples 50% cheaper per pound than I was fry got wind of it he started selling his apples 75 cents

cheaper than Withers he's the bottom feeder he came in with Withers best and offered them for a dollar less per pound and almost overnight as is the case in

most capitalist societies I find myself with a big headache because what was a profitable business attracted a ton of attention

and as it attracted that attention it attracted competition and I lost my profits and my advantage that is why a Moote is so

important because when a company has a OTE it can incinerate that competition or at least make it incredibly incredibly difficult for that

competition to actually compete with what you are offering on the market and since I got my mop back I'm happy again not only am I happy but my shareholders

are happy my employees are happy maybe my customers aren't happy because they don't have a cheaper option but hey I got a out so what are you going to do about it so

that is what a mo is I'm just curious do we have any any questions in the Q&A uh like any any big ones if not we can move right on NOP everything handled all

right so let's talk about what these five modes are now I'm just going to name them and then we'll dive into each one one of them is called Network effects another is called switching

costs a third is called lowcost production a fourth is kind of a catchall it's called intangible assets and our fifth is called counter

positioning so these are the five general broad modes that any company can have so let's dig into each one we'll start with network

effects what is a network effect it is where new users to a service or a product create value for existing users

and there's no example that's easier to understand than telephone because look if only two people in the world had a telephone well everyone who didn't have a telephone would not feel like they

were missing out very much but as soon as more people started getting a telephone the people who didn't have telephones were losing out because they weren't part of the network so they joined and that made the network even

more valuable from those that already did have telephones and so that's how it feeds on itself now Ken I know that you don't have any kids right now but if you did

do you know when you would let them have say a smartphone yeah that's a tough question um because I would want to wait but I I don't think it's that easy to just tell

your kids they can't have a phone yeah it I I agree my daughter is starting sixth grade next week and most of our friends don't have a smartphone yet but

I know that as soon as they do my it's going to be hard for my daughter to communicate with her friends because right now they have to go through the parents and if everybody has to do that it's fine but if she's the only one who

has to do that I'm going to feel some pressure I'm going to feel some pressure to let her into that Network that's an example of network effects so let's go on to number two which is switching

costs switching costs again are pretty easy to understand it's once you become a customer it becomes painful to switch and what do we mean by painful it could

be painful in terms of the amount of time it takes or the amount of money it takes to switch or the train you have to go through or just the pain in the butt that it causes or A disruption in your

business so I'm curious Ken in your life do you do you have any service or product that you use where you think it'd be painful to switch away from it you know what I think it would be kind

of hard to switch uh phone carriers for my cellular okay and what do you use I use AT&T and you know what we we've got some weird Pockets where AT&T doesn't

work and where other carriers don't around here so that would be a pain in the butt all right mine is is pretty simple I'm going to start off by saying I apologize if anyone here works for

Wells Fargo okay but I went to college in rural Iowa and I had to open my bank account when I was in college that I was going to use in my adult life Wells

Fargo was the only National Bank in my tiny little Iowa town so I used Wells Fargo now you probably read over the past 20 years there's been a lot of stuff that Wells Fargo has done that's

led to a lot of fin I'm like I should probably switch to a local bank but the thing is is my mortgage my credit card payments my utilities the things that

I'm probably not even think of they're all tied to that Wells Fargo account I'm like you know what it's just not worth it I missing mortgage payment I miss a credit card payment credit score gets

dinged in my worst imagination like my home gets taken away from me just not going to do it so bank is a great example of that so those are switching costs now the next one is

lowcost production lowcost production this exists when any company can produce the same or a better product

or service for a lower internal cost than their Rivals now I'll give you one that people don't think of often can there's a couple consulting firms that I

follow and they their Consultants are from Eastern Europe where salaries are much lower but they have the same level of Education than their Western

counterparts and unless companies are willing to set up shop in Eastern Europe and hire just Eastern Europeans at Eastern European Wages that's hard to compete with that are are there any

others that you can think of where there might be a a a lowc cost Advantage you know uh one of the first things that comes to mind is just Walmart they it everything for a lower

cost there you go or Ikea basically anything that becomes really big Like Home Depot has a lowcost Advantage not over lows because lows is Big too but

over a lot of mom and pop stores because they can spread their costs out over over a ton of different locations so uh efficiencies of scale in my book fit

under lowcost production all right now let's go to the the catchall intangible assets that can mean one of three things and Ken I'm just going to ask you if you've got an example of this let's

start with brand is there a brand and it's important Brian froley has taught me this there's a if you know Delta Airlines but you're not willing to pay

more for a Delta Airlines ticket that is not a brand moat is there a for you Ken is there a brand that you willing to pay slightly more for you know what since I

got my first uh smartphone the only phone I'm going to buy is an iPhone I'm right there with you buddy got my iPhone right here I would agree Apple got a very strong brand second one

intellectual property or patents now I asked you about this yesterday when we ran through this and you surprise me what is an industry that you think is protected by patents so yeah the example

I like it's an industry I'm really interested in is the hvacr industry um heating ventilate air conditioning uh and refrigerant and I'm looking at a

company that's got a recovery machine that's used in all kinds of processes that is its own own design is protected by a patent and it is it's it's a

competitive Advantage for them all right well there you go the last one is government license now the industry I would say government licenses applies to the most that's obvious to me is

utilities right you're not going to have five different electricity companies in the same town it just doesn't make sense there's only so much space and waste

that can be produced and things like that so that would be one and so that's intangible assets there's kind of three prongs to that let's get to the last one and then we'll talk a little bit about

what happens if you lose your mode now this last one I got to credit Brian foldy again for bringing to my attention is counter positioning now it's worth

stating this Moe does does not last as long as the most powerful of the other modes it's kind of has a shorter shelf life but it's where the competition

would have to give up sales to adopt your business model and Ken you and I are about the same age and I'm wondering do you remember Blockbuster

Video I remember Blockbuster Video really well I went there at least twice a week with my mom when I was younger do you know how Blockbuster video made most of their

profits well considering my mom would hand me a video and be like hey when you go to work drop it off at a blockbuster across the street so that we don't get

hit with a late fee yes I do yeah and so yes you paid for your your rental right they didn't hand it out for free it wasn't the library where you just paid

fines but those fines are how the company made their money so when Netflix came along and I'm not talking about streaming Netflix I'm not talking about stranger things or anything like that

I'm talking about Red Envelope Netflix when they came along could Blockbuster have taken on Netflix's business model sure because there's no late fees at

Netflix they could have but man would that have been painful for them to do because they would have had to have cut off their primary profit engine in order

to make that switch and it was not a switch that they would like to do now there are lots of other examples of this and we'll get to that a little bit later but that's just a Peak at what counter

positioning looks like so those are our five real modes Network effects switching costs lowcost production intangible assets counterposing and

again this is from 30,000 ft so this is not super super specific now I'm going to just check with you Ken is there any recurring question that comes up or are we good to move on because we can get to

individual ones yeah you know I think uh some of some of these are things we are going to cover a little bit um like someone asked

how can a moat be destroyed are we going to give examples we are going to talk about some examples and um you know about evaluating products and software can are there instances where switching

cost can become a disadvantage um how to categorize railroads oh yeah and someone wants to

my HVB company all right these are these are great questions we will get to those um but here's the question because someone might have said well what

happens when a moat disappears when a moat disappears or when it becomes apparent that there was never any moat in the first place I guess that's fair

to say too remember if you have an idea that's profitable you will attract attention and if you attract attention this is this works great for consumers

not so great for investors and operators competition will come along and steal those profits away and so you only have two options or a combination of two

options go go back to my Apple example if you and frolan Withers ruin my business by offering lower prices I can either keep my apples at the same price but accept that I'm going to have fewer

sales right fewer people are going to come to me or I can keep everyone coming back to me but I'm going to have to lower my prices or some combination

thereof those really the only two things that I can do to combat that if I don't have a moat and so for this example we'll talk about Whole Food so I'm

curious Ken I I was a huge I I visited Costa Rica in 2010 worked on an organic coffee farm and I was like sold I was like organic food that's what we're going to get 2010

this was the only place to get it were you a visitor of Whole Foods yeah during this range H my wife and I started too but not early on um and we didn't get

one in town until probably around the tail end of this part okay and in all fairness once I became a parent and I had to pay for more things I was much more much more willing to trade out of

Whole Foods but this is what Whole Food stock did from just after the great financial crisis so this is mid 2009

until mid to late 2013 over this time frame of just a couple of years it if you're up 500% you 6X so if you put $100

into Whole Food stock it was now worth $600 of course that attracts attention what kind of attention well Costco says but we're going to get into organic

goods and Kroger says well we're going to have a private label brand and Sprouts Farmers Market says we're just going to focus on this stuff and Walmart comes in and they said we're even going to have

one and so look and we would ask ourselves when this happened I didn't go through this exercise I held Whole Foods throughout this but does it have a

network effect well it it doesn't if Ken shops at Whole Foods doesn't really make it all that much better for me does it have lowcost production well against mom and pop stores yes

absolutely Whole Foods has emote against mom and pop stores because they have efficiencies of scale but does it have that against

Costco and Kroger and Walmart uh not so much counter positioning not really switching costs maybe if they have a benefits card but that's a pretty narrow

moat and so the whole question became or should have become for me at that point in time is is the Whole Foods brand strong enough that people will continue going to Whole Foods even when all those

organic goods are available at Costco and Kroger and so on and so forth and the answer was no it was not because organic the sale of organic Goods in the

nation continued going up but that's not what happened to Whole Food stock it fell 54% and that's what happened

when a company doesn't have a moot so we're going to do some practice here we're going to open the polls up and we're going to get a whole bunch of different responses and that's okay so Ken for each one of these let's do 15

seconds and I'm going to just leave the the stopping and the sharing to you does that sound good all right gonna give us a company that company is Airbnb everybody knows it when they try and book some travel going

somewhere so the question is they might have more than one of these five modes but which of these five modes let's put it in the poll do you think is the most

important one for airb and B all right that's about 15 seconds all right everybody looks like a lot of you are getting this all right and I see

that we've got you guys want to share oh there you are sharing the screen okay yep 64% of people say that Network effects are the most important mode and

it is worth pointing out I could see an argument for lowcost production they don't pay anything for all those rooms I could see an argument for brand value I could definitely see an argument for

counterposing against hotels but I would argue YES Network effects most important why Ken if you want to rent your house out for a month where can you go where you know you're

going to get eyeb like Bill millions and millions of eyeballs Airbnb Airbnb and if you want to come visit me in Wisconsin and you don't want to stay in a hotel where do you know you can go

that's got hundreds and hundreds of options Airbnb that's the network effect all right so we did pretty well there let's see if people agree with what we

put down for a second one and we can put the next poll up and the question is Eli Lily pharmaceutical company what is their primary mode

looking pretty good let's share those results and you see that arguments can definitely be made for some of these other ones I definitely see lowcost production I even

see switching costs but intangible Assets in the form of patents is is Paramount you hear about drugs coming off patents all the time because there

are publicly traded drug companies out there I think TAA Pharmaceuticals is one of them that they only specialize in making generic drugs and so if you know that's out there that's great as a

consumer but Eli ly knows once those come off patents there's going to be some pressure on those prices all right so so far I would say that we're we're

mostly in agreement here let's go to our third company which is Walmart if you had to choose one moat that really

protects Walmart what would that be well this this one's the most lopsided I've ever seen I I think we hit this one we hit the nail on the head here maybe it's because we gave that

example earlier on but we'll Pat ourselves on the back and say we did a good job lowc cost production and K it's not just that

Walmart just has one CEO and it can spread that out over 10,000 locations but if you are Merchant and you want your goods to be in Walmart who has all the

leverage y they do they do and so they're going to demand the lowest prices and importantly they're going to pass on most of those savings to their customers because they know no one else

can all right we're doing a pretty good job we've only got a couple more lowcost production totally agree that's what I would have as well let's move on to our next one which is Inuit for those that

aren't familiar in is the parent company of turbo taxs and QuickBooks which small businesses use to keep their books their

their the their sales and and things like that um and it's it's looking you will see the results in just a minute but I would agree 100% with what most

people are saying when it comes to this also you know one thing I would add is that um there isn't just one single Moe for every company so exactly if you

answered something else that doesn't mean it doesn't exist absolutely I know Ken I use Turbo Tax I I've been using it since

2008 and yeah I know I pay that I know they jack up the prices every year like I know that but I also know that it autofills all that information for me and I don't have to do any of that and

it's just like H I'm not switching and I haven't been audited yet so that's good too so they must be doing something right all right so switching costs for into it I would totally agree all right

this one's a little bit trickier what do you think is the primary mode for Costco it's a little bit of a trick question but let us know what do you think is the

primary mode that Costco has this is very interesting we're gonna have to make sure we do polls in every single one of our webinars because this is really fun to watch

well let's show people what we've got because this is great so you see that 37% of people said lowcost production 20% said Network effect 29% said

counterposing so I would agree lowcost production is a pretty easy one because they've got efficiencies of scale But Ken did you know what accounts for over

70% of Costco's profits every year um let me guess probably those fees I have to pay pay every membership fees and those membership fees are a form of

counterposing because look if wmart wanted to do what Costco did they would have to all of a sudden tell everyone who's used to coming into their stores that they have to pay I don't know what is it 60 65 bucks a year now well

they're gonna that's not a change you can just make you've got to come on to the scene and be a membership model and so like you said there's not just one I think both of these work and I I would

love to talk more about the network effect because I could get some education some people see a network effect there too yeah I agree I believe we've got one more left and this one is

the one I'm most interested to see what people have to say Amazon what is the primary Moe that Amazon has and I'm just going to watch these

numbers come up because it's I could tell everybody had to think a little bit for yeah there was a little bit of ause and that's good that's maybe maybe that means this is a good business that you

really have to think about it and at the end of the day investing is not black and white even though I'm giving you one answer it's it's a 100 Shades of Gray so let's look at what people said looks

like Network effect came first so Network effect I'll explain I make widgets and I want to sell them I put them on Amazon and because there's so many widgets on Amazon that attracts

customers that's a network effect but switching costs Ken you Prime member I am a Prime member yeah you're not going to get a better deal than that but there's this other part of Amazon's

business has switching costs too and it's the most profitable part and that's Amazon web services you it would take a lot to switch who is handling all of your digital assets but it's not just

that there's lowcost production they can send a package to my front door for cheaper internal cost than anyone else there's also intangible assets this is

an incredibly powerful brand and then Ken why do you think we got a dotted line around counterposing here you know they used to have it they used to have

it they turned back in 2005 the fact that they had no physical stores turned Walmart's physical stores from an asset to a liability Walmart Acquired jet.com and they kind of figured it out and so

they've kind of writed that ship so let's just talk about the key takeaways again this is just Moes from 30,000 ft in a capitalist Society if you make a

lot of profits competition will come and take those profits away and that's a great thing for consumers it's just not so great for investors and operators so the only way that you can combat that is

if you have a moat and there's five different types of Moes Network effects switching costs lowc cost production intangible assets counterposing we talked about each one

of them Network effects you're creating value switching costs are pain in the butt lowcost production economy is a scale is the big one there's three

different type of intangible assets and counter positioning is the is the trickier one we give up sales to adopt your business model now we're going to do Q&A in just a minute we want to let

you know after about 10 minutes of Q&A we're going to let you know about the service that we are pre-launching today at a significant discount just for people watching this webinar okay so

we're going to do that but we promised you Q&A so we want to do that first so Ken I'm going to stop the screen share we can pull up Q&A and let's see what kind of questions we

got just just a reminder to folks that we will be sending out everybody who registered for the webinar will be sending out a replay um as well as the key slide so I know that was a question

on a couple of them awesome thank you Mr Withers um why don't you start at the top Ken I can start at the bottom all right starting at the top an new asked how can a moe be destroyed and can you

give some examples all right that's great question a mo can be destroyed I'd say technology is the biggest thing that can destroy Moes or a

company coming in who is willing to just kind of shoot themselves in the foot so an example would be uh AT&T Sprint Verizon they used to

make it so that you could call for and you wouldn't have to pay minutes for calling people who are only on your network AT&T Verizon Sprint whatever that's what it was in college for me but

technology so that there was there was a network effect there right if I want to talk to Ken and I want to talk and not lose minutes then Ken's got to get on my provider but technology evolved so that

that wasn't the case anymore and so that the UN the great unbundling who was it uh T-mobile um that that destroyed the mo

technology is a great example any others thing yeah you know one my my thought is sometimes moat is thrown around so Loosely that um I always like to think

of two things a moat and a competitive Advantage a competitive Advantage could lead to a moat sometimes a competitive Advantage can be eaten away whereas I

feel like a moat is more sustainable so sometimes that moat erodes because it's just that's not a strong enough competitive Advantage it wasn't really a

moat to begin with yep now I see a whole bunch of questions in here about how you analyze Mo we're going to tell you how we do that that that that is a topic we could take a whole year in fact we plan

on taking a whole year to show you how to do that but I want to take bram's question here because I think I've got a a question that can help you bem's question was I just started my portfolio

a company gave me money to trade stocks for them what are the best ways for me to have lower risk with a good moat well lower risk that gets into valuation but

a good moat Bram think of it this way pretend I give you Bram a hundred billion doll and 10 years and I say here you go Bram hundred billion dollar you

got a decade but you must be the top of whatever industry you go into at the end of 10 years and if you're not the number one player in that industry at the end of 10 years then you owe me all that

money back and the question is BM which industry are you just not going to go into for instance if you want to go into the soda industry good luck coming up you could

come up with a soda that tastes way better than Coke but the blind taste test between Pepsi and Coke from 30 years ago showed that Pepsi won repeatedly and people still chose Coke so I would not spend that

hundred billion dollar in 10 years trying to come up with a better soda Coke although I don't think brand value is super strong they've got a brand they've got a moat so that's just a

question that I would use to kind of say well I wouldn't go after them because their remat is just so big that's that's a question you can ask yourself that would help you to figure that out

you got another one Ken yep one from Bryce here um asking about when evaluating software companies um switching cost vendor lock in are there

instances where High switching cost can become a disadvantage for a company nice switching cost I mean I think that they become a there's two things right if

you're in a high switching cost industry and I think that there's certain software companies that fall into that one you better bet that your sales and

marketing budget is going to be huge why because if you're in a high switch and cost industry and you're trying to win over customers you're going to have to spend a lot of money on sales and marketing to get those customers to

switch to you so that's number one but number two again technology technology can change switching costs there's a whole bunch of software companies out

there right now where it's not clear how strong the mode is because it's not clear how strong in costs are if you can Port all of your data over from one provider to the other and have them

search through that data super quick well then I'm not sure if there's that much switching costs at play there um I'm going to take this one from Andrew who said when investing do you look for

companies that have multiple modes or companies that have incredibly strong singular modes is there ever a case where you would invest in a company with no Moe like commodities for a quickly

growing space Andrew if I was a special and your example was uranium for nuclear if I was a specialist in uranium in that market or nuclear power for that market

yes but if you were listening at the beginning of this I started my career as a middle school writing teacher so guess what there are very few areas where I'm going to have specialization to know

about Commodities so I like to focus on either companies that might just have one Mo but it's super strong or multiple

mes Ken you got any others yeah uh AI hopefully I'm saying that correctly how would you categorize

railroads I so I would categorize railroads as like an intangible asset and the reason I would say that is I think that there is some government regulation around railroads because look

people aren't building tons of railroads anymore in most of the developed world so that's aote right um and so I

the there there's the real estate and there's the there's the the government licenses and things like that so that's where I would put the there there are huge barriers to entry you don't hear

about startup railroads anymore right so you got to accept that railroads are just going to kind of EB and flow with the overall economy because they get paid based on how much stuff is in the cars that are being shipped and if you

specialize in that if you know that if you know what the Cycles are well then you know something important uh here's one from Joel can restaurants have a mo great question

because Cava I own that stock and I think brand is the only real mod that restaurants have so Cava for those of you who don't know the the elevator pitches this is the uh Chipotle of

Mediterranean food right do they have a moat of lowcost production over Mom and Pop stores yes they probably do because they can have a distribution center where they prepare

some food and they ship it out to all their locations but really it comes down to Brand value and and that's all it is brand value can be very fickle but if it

can solidify it can provide phenomenal returns phenomenal returns think about monster beverage right they're not producing anything that anyone else can't produce that's got enough money to

do it but they have brand value and that's not nothing which is what made it one of the best stocks to hold for the last 25 30 years yeah maybe maybe there's some kind of intellectual ual

property that could go into that whether it's process-based equipment spices but I don't I think those could be attacked pretty pretty

easily yep Juan Pablo asked maybe the most important question of our time right now which is in the case of Technology it's not easy a loss Mo in

the technology Market I think that what we're in a phase right now where we're wondering how strong are the modes in the technology Market is generative AI

going to make it possible for me for instance to just come up with my own code for a customer relationship management database so I don't have to

go to Salesforce or I don't have to go to HubSpot I don't think we know the answer to that yet maybe some technology Specialists do but that's a big question

right now is how wide are the Moes in technology to follow up on that question because it's related Carl asks how can you tell if company lost or is losing

OTE I know we've discussed this about uh Whole Foods and other companies what what are some of the metrics that you look for or some of the other things now there's a whole bunch of metrics you can use but actually in our first week of

Stock Investing Mentor we're going to talk about just this and I'll just give you a preview if there was if I could only choose one if I could only choose one thing it would be gross margin gross margin now