• The only moats that matter in AI are those that compound with usage.
• If a moat doesn’t get stronger every day your users engage, it’s not defensible.
• These five moats represent structural advantage under sustained incumbent pressure.
• Individually strong — but exponentially more defensible when stacked.
• Their strategic power lies in irreversibility: once entrenched, switching becomes economically or psychologically irrational.

The Compounding Core

Moats That Strengthen Over Time

A moat is defensible only if each incremental user makes the product better, harder to replace, or both.
Everything else is a feature — and features don’t survive Google, Microsoft, Meta, Amazon, or Apple.

1. Data Network Effects

The Strongest Moat in the AI Era

Usage generates unique proprietary training signals.
More users → better model → better outcomes → more users.

Why It Compounds

• Reinforcement loops accelerate quality
• Proprietary data becomes irreplaceable
• Improvements scale with usage, not headcount

Examples
Cursor (coding), Gemini (writing)

2. Community Moat

User-Led Growth and Value Creation

Passionate users generate unique knowledge, workflows, plugins, and shared norms.
This creates cultural lock-in that competitors cannot replicate.

Why It Compounds

• Community produces content, extensions, and brand equity
• Social belonging creates emotional switching costs
• Growth becomes user-propelled, not marketing-propelled

Examples
Midjourney (Discord), Hugging Face

3. Specialization Depth

Domain Expertise With No Generalist Substitute

Depth beats breadth.
Expert systems outperform generalized models when vertical nuance matters.

Why It Compounds

• Domain knowledge → specialized data → tailored performance
• Incumbents deprioritize niche use cases
• Industry relationships + tacit knowledge accumulate slowly

Examples
Harvey (legal), Abridge (medical), Runway (video)

4. Workflow Lock-In

Embedded in Daily Routines and Operational Processes

Once a tool becomes the backbone of someone’s workflow, replacing it is painful, costly, and risky.

Why It Compounds

• Users build automations, shortcuts, habits
• Teams normalize around the tool’s logic
• Integration investments create sunk switching costs

Examples
Notion (AI workspace), Figma (AI design tools)

5. Enterprise Relationships

Long Contracts + Security Requirements + Procurement Cycles

Enterprise AI is not won by features — it’s won by trust, compliance, and integration.

Why It Compounds

• Multi-year contracts stabilize usage
• Security reviews create organizational inertia
• Custom deployments become too expensive to unwind

Examples
Anthropic (enterprise), Fiddler AI (monitoring)

Strategic Interpretation

Stack Moats to Escape the Kill Zone

One moat is good.
Two moats are defensible.
Three moats build incumbent-proof leverage.

To win in the AI era:

• Build where usage compounds,
• Embed where workflows never unwind,
• And cultivate communities and domain depth incumbents can’t copy