Two of my portfolio companies had opposite approaches to why your ai moat is probably a myth. The one you'd expect to win didn't.
Founders love to say their 'algorithm is the moat'. It's almost always a myth. I'll explain why true defensibility comes from the system around the algorithm, not the algorithm itself, and how to build it.
The Counterintuitive Truth
Here's what surprised me most about why your ai moat is probably a myth: the best practitioners do less, not more.
When I was building MovieLaLa, we tried to do everything at once. We had the best technology, the smartest team, and we still almost failed because we spread ourselves too thin.
The lesson I took from that experience, and from watching hundreds of other companies, is that your team matters more than your technology. It sounds simple. It's incredibly hard to execute.
The Framework That Actually Works
I'm going to share the exact framework I use when evaluating why your ai moat is probably a myth. It's not complicated, but it requires discipline.
Step 1: timing is everything in this game This is where most people go wrong. They skip this step entirely and jump straight to execution. Don't do that.
Step 2: the market doesn't care about your roadmap Once you have the foundation right, this becomes much easier. I've watched founders struggle with this for months when the answer was staring them in the face.
Step 3: Iterate relentlessly Nothing works perfectly the first time. The companies in my portfolio that nail why your ai moat is probably a myth are the ones that treat it as an ongoing process, not a one-time project.
The Reality Nobody Talks About
Most people approach why your ai moat is probably a myth with assumptions that made sense five years ago. The world has moved on. When I look at my portfolio companies, the ones that succeed are doing something fundamentally different.
The first thing to understand is that timing is everything in this game. I've seen this play out across dozens of companies. The pattern is unmistakable.
At RemoteTeam, we learned this the hard way. We spent months going down the wrong path before realizing that the market doesn't care about your roadmap. Once we made the switch, everything changed.
What I Tell Founders
When a founder in my portfolio asks me about why your ai moat is probably a myth, I usually start with three questions:
- What's your timeline? Because the right approach for a company with 6 months of runway is very different from one with 3 years.
- What have you already tried? Most founders have tried something. Understanding what didn't work is often more valuable than knowing what might.
- Who on your team owns this? If the answer is "everyone" or "no one," that's your first problem to solve.
These questions seem simple but they reveal a lot about where a company actually stands.
This connects to broader themes around AI due diligence, AI exit strategies, AI talent wars, AI startup pivots, AI market sizing that I've been thinking about a lot lately.
Wrapping Up
I've shared a lot here, and I know it can feel overwhelming. But here's the thing about why your ai moat is probably a myth: you don't need to get everything right on day one. You just need to get started and keep improving.
The founders in my portfolio who excel at why your ai moat is probably a myth share one trait: they're relentlessly practical. They don't chase perfection. They chase progress.
That's the mindset I'd encourage you to adopt. Start where you are. Use what you have. Do what you can. And keep pushing forward.
As always, I'm rooting for you.
Frequently Asked Questions
How can I apply this thinking to my own situation?
Start by identifying the core principle behind the opinion, not the specific example. Then ask yourself: does this principle apply to my context? If yes, test it in a small, low-risk way before going all in.
Do all experts agree with this view?
No, and that's fine. The best ideas in business are often contrarian. I share my perspective based on my experience and data, but I encourage you to seek out opposing viewpoints and form your own conclusions.
How has this view evolved over time?
My thinking on most topics has changed significantly over the years. Early in my career, I held many conventional views that experience proved wrong. I try to update my beliefs when the evidence changes.
What experience informs this perspective?
This perspective comes from over a decade of building companies in Silicon Valley, two successful exits (RemoteTeam to Gusto, MovieLaLa to Gfycat), and investing in 200+ startups including Anthropic, OpenAI, and Scale AI. I write about what I've lived.