Musk vs Buffett: Innovation vs Moat Building - Who wins?

in #steemit5 years ago

Elon Musk v. Warren Buffett: Pace of Innovation vs Economic Moat Building business models. Differences in investment philosophy

Elon Musk talked bad about Warren Buffett’s investment theory of “moats.” In the words of Investopia regarding an economic moat:

What is an 'Economic Moat' ❓

An economic moat is a competitive advantage that one company has over other companies in the same industry; this term was coined by Warren Buffett, a renowned investor and executive at Berkshire Hathaway. The wider the moat, the larger and more sustainable the competitive advantage of a firm. By having a well-known brand name, pricing power and a large portion of market demand, a company with a wide moat possesses characteristics that act as barriers against other companies.

In Berkshire Hathaway’s annual shareholder meeting, Warren Buffett made some snarky remarks about his economic moat in selling candy at See's Candy.

The exchange of words showed the egos of Elon Musk and Warren Buffett and their fundamental differences in investment style.

“Moats are lame,” Elon Musk told investors on an Tesla earnings call last week, “What matters is the pace of innovation”.

Warren Buffett

-- owner of See’s Candies -- said later that “Elon may turn things upside down in certain areas [but] I don’t think he’d want to take us on in candy”.

Musk later unleashed a Tweet-storm sarcastically describing plans to “build a moat & fill it [with] candy… Berkshire Hathaway kryptonite”.

Two billionaires, who have different investment strategies: Buffett who invests in stable, near-monopolies over decades while Musk’s investment is in fast paced innovation.

Where does this put Steemit ❓

Steemit is a fast developing innovative business that is opensource and looking to disrupt the social media industry.

As long as Steemit keeps innovating, squarely putting this in the Elon Musk camp, we may see a very disruptive business model. Furthermore, we can see that Steemit has a first mover competitive advantage, ie a economic moat.

Where do you think should go ❓

Comment below...

Also comment if you believe or invest like Elon Musk in disruptive tech companies (probably a no brainer question) or if you invest like Warren Buffett in the slow and steady way?

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Musk is innovating but really needs to get better at building a profitable venture

His revenue in continually increasing. Profit doesn't matter when everything is reinvested..

These are two "almost pure" approaches to business – Buffett represents the old-fashioned reliance on reliable businesses and their traits that have passed the test of time; Musk represents the promises of disruption, potential for very fast expansion in coming years, and indeed, bubbles and manias where this obsession often leads because it's much easier to pronounce big words and get enthusiastic than to provably produce billions by hard work.

Both approaches have been important. If the Buffett approach were a little bit more extreme and dominating, there would have been no progress. If the Musk approach were a little bit more extreme and omnipresent, everything would have been just bubbles and P.R.

Different industries have different typical time scales of innovation – the timescale τ after which the performance or profits increase by the factor of e or the expenses drop by a factor of e or something of the sort. For some kind of products, like candies, you don't have to watch the innovation every day. In some other fields, like the hi-tech stuff, you do have to follow what's going on every week.

Profit isn't the only marker of success, but i get your point..

Exactly. Look at vulture captialisim. Group buys company, sells off profitable company assets to make some quick cash. Saddles the company with debt from other companies then lets it file bankruptcy to kill that debt.

See Sears or Toys R Us.

I am looking at you Romney.

Buffett and Musk are great at totally different industries/strategies. Elon can call moats lame but Berkshire still has about 20% compounded returns over 50 years now and has become the number two Fortune 500 company currently.

Steemit does have a good moat via the blog aspect, but there still seems to be a breakout moment waiting to happen. I'm bullish long term but it all boils down to simply assuming more people and more money will move into Steemit in the future. I can't really make educated projections on how many humans will start using Steemit, so it does have a speculative element to it insofar as betting on a trend.

I always love to see posts about Buffett here, cheers!

very useful article dear @thefinanceguy

I think both investments can be applied to Steemit.

Being the first decentralized social media, like Bitcoin being the first crypto, will build that moat against other decentralized social media platforms that will emerge and create that value. When the masses wakes up and searches for a crypto-based social media platform, the first thing that will pop out from their search fields will be Steemit. Unless, Facebook decides to share their wealth with the blockchain/crypto that they are developing right now, then that's something else.

Being that this platform is very new, it has that edge in innovation as well. I think that crowd development will also have an advantage in innovation.

Being first gives that lasting perception of being the best. Being a new tech gives it a lot of room for innovation.

People use facebook to feed their ego. They post photos of them doing everything and anything to show off. To show that they have a great and fantastic life even if they don't. They can do that easily and they have their friends as their audience. Their friends do the same thing and they try to outdo each other. Facebook knows how to feed their ego. That's why many people uses facebook. They get to make themselves feel important there. During my 7 days here, I don't see that kind of pull from Steemit. Only the people with money dominates the trending page. The new people with no steem power has no chance to show off like in facebook. They can't feed their ego here. Take me as an example, No one reads my post or upvote my post here. No one even care to listen coz I have no power, my ego is totally bruised here! Lol. I don't use facebook a lot but I know a lot of people's face are stuck onto facebook. But I must admit, I show off sometimes too on facebook. I don't see that here.

Hey, I've just read your comment. As you see it is possible to boost ones ego even on the steem blockhain.
In fact I understand your point, but want to mention that one has the possibility to follow his 'friends' only and read their posts in ones feed only. The main difference with Facebook would be the unidirectional link structure. On Facebook your posts are presented to your 'friends' and vice versa. Not so on Steemit, which is more similar to Twiiter with its 'followers' in this point.

Interesting. Everyone is entitled to their own opinion.

Ya, I get what you mean. I upvoted but my upvote value is so still 0.00.

i like Elon Musk style but I also admire Warren Buffet. They are both geniuses. If I could be just a tiny fraction of what they are, that would suffice for me. They both work very hard though.

Steemit need strive to be like Elon Musk. If not, another technology will out pace the platform.

The battle is not yet over and today’s innovative tech swiftly becomes tomorrow’s standard investment!

Warren Buffet is the past. Elon Musk is the future. Warren Buffet promotes fiat currency. Elon Musk will take us to the stars. Shut up and eat your candy old man.

Nothing wrong with slow and steady growth. Buffet's past is what helps build the capital for investing in Musk's future.

we need both of them. like yin and yang. while Buffet maintain stability and order to economy, Elon roles is to breakthrough new boundary, if i would, i pick Elon side. Only with breakthrough, humanity will trancend.

excellent opinion dear @teachinthai

Steemit is very fast money laundering! This is the biggest online earner platform in the world Which will pay for the publicity of its customer's post.

I'm with Elon till the end

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