When I started CCAW, I saw an opportunity to do certain things better. Automotive suppliers and manufacturers were inefficient and had issues turning inventory. Customers had a hard time finding the parts they wanted quickly. The inventory was available and the demand was there. The two just needed to be connected more efficiently. I ran with it. What I didn’t think about was competition. Other people saw a similar opportunity and were trying to capitalize on it.

Efficiency and defined processes allowed us to provide a great experience to our customers and vendors. But that wasn’t enough. It wasn’t the defensible moat we needed to scale the company to the level I envisioned ($100 million or more in revenue). What we were doing could be replicated. Plus, we made some things easier for customers, but we didn’t solve their biggest pain point: installation of the parts.

Moats are important for founders to think about. You don’t need one on day one, but you should be thinking about ways to dig a defensible moat to protect your company against invading competitors and margin erosion.