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'Moat' Is the Latest Jargon Encircling Silicon Valley

As technology companies race to invent the future, they're turning to a metaphor borrowed from Medieval times to explain their businesses.

'Moat' Is the Latest Jargon Encircling Silicon Valley

"Moat" has become a favorite term of tech executives. It's typically used to describe products or services that protect a company from incursions by competitors. The word has come up 89 times since last year in earnings calls, presentations and other tech company events, according to data compiled by Bloomberg. Two dozen of those were this year, and on the current trajectory, it's likely to match 2016's total.

Moats, in the business sense, were popularized around the turn of the century by billionaire Warren Buffett. It initially took off in the financial services sector and spread more recently to Silicon Valley. At a 2013 financial analyst meeting, Steve Ballmer, Microsoft's then chief executive officer, likened the company's investments in cloud infrastructure to a moat.

Use of the phrase within tech circles soon exploded exploded, including by Ballmer's deputies. Scott Guthrie, the executive vice president of cloud and enterprise at Microsoft Corp., outlined the major initiatives his firm was undertaking to dominate cloud computing at the Deutsche Bank Technology Conference in September: "You ultimately need to have three things, which create kind of a moat, if you will, around the market."

SPS Commerce Inc., which makes supply-chain management software, has been building the most moats of any company since the start of 2016, according to transcript data. IRobot Corp., maker of the Roomba, and Adobe Systems Inc., which owns PhotoShop, were also digging their own metaphorical water-based defense systems.

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"Moat" has become a favorite term of tech executives. It's typically used to describe products or services that protect a company from incursions by competitors. The word has come up 89 times since last year in earnings calls, presentations and other tech company events, according to data compiled by Bloomberg. Two dozen of those were this year, and on the current trajectory, it's likely to match 2016's total.

Moats, in the business sense, were popularized around the turn of the century by billionaire Warren Buffett. It initially took off in the financial services sector and spread more recently to Silicon Valley. At a 2013 financial analyst meeting, Steve Ballmer, Microsoft's then chief executive officer, likened the company's investments in cloud infrastructure to a moat.

Use of the phrase within tech circles soon exploded exploded, including by Ballmer's deputies. Scott Guthrie, the executive vice president of cloud and enterprise at Microsoft Corp., outlined the major initiatives his firm was undertaking to dominate cloud computing at the Deutsche Bank Technology Conference in September: "You ultimately need to have three things, which create kind of a moat, if you will, around the market."

SPS Commerce Inc., which makes supply-chain management software, has been building the most moats of any company since the start of 2016, according to transcript data. IRobot Corp., maker of the Roomba, and Adobe Systems Inc., which owns PhotoShop, were also digging their own metaphorical water-based defense systems.

Read Full Article

'Moat' Is the Latest Jargon Encircling Silicon Valley