1.
The New Moats
Why Systems of Intelligence™
are the Next Defensible Business Model
Jerry Chen

2.
In business,
I look for economic
castles protected by
unbreachable moats.
- Warren Buffet
“
”
Photograph: Stuart Isett/Fortune Most Powerful Women

3.
To build a sustainable and profitable
business, you need strong defensive
moats around your company.

4.
Massive Platform Shifts
Mainframe
Client/Server
Cloud/Mobile
Virtual
Containers
AI
Chat
IoT
Mini Computers

5.
Traditional Economic Moats
Economies
of Scale
Network
Effects

6.
Other Traditional Moats
Deep tech/IP/
Trade Secrets
High Switching
Costs
Brand and
Customer Loyalty

7.
Strong moats help companies
survive through major platform
shifts, but surviving should not be
confused with thriving.

8.
Old Moats Can Be Destroyed
Massive platforms shifts— like cloud and mobile — are technology
tidal waves that create openings for new players to build paths over
and around existing moats.

9.
No More Moats?
The “new incumbents” operate at massive
scale, have strong network effects, high switching
costs, and well known brands, making it hard for
new companies to enter.
Open source tools and cloud have brought down
technology barriers making it hard to monetize
deep IP.

10.
Going Full Stack
Today the market is favoring “full stack” companies, SaaS offerings
that offer application logic, middleware, and databases combined.
Consumer Seamless integration of hardware and
software. (e.g. iPhone)
Enterprise SaaS at the top of the tech stack instead
of having to buy individual pieces and
build their own apps.

11.
The Stack of Enterprise Systems
TM

12.
The Stack of Enterprise Systems
TM
Interfaces between users and
systems of record.
Data and workflow for a critical
business process.
TM

13.
The New Moats: Systems of Intelligence™
TM
TM

14.
The New Moats: Systems of Intelligence™
TM
TM
Systems of intelligence™
leverage multiple systems of
record to produce better or new
business workflows.
Over time, they become their
valuable and defensible by
becoming their own system of
record.
TM
TM

15.
Where can you build Systems of
Intelligence™?
TM
TM
Customer Centered Apps: Apps centered around the customer
journey
Employee Facing Apps: HR & IT
Critical Business Workflows: ERP, Asset Management,
Financials
Infrastructure: Security, Compute, Storage, Networking and
Monitoring/Management
Vertical Clouds: Build a system tailored toward a specific
industry.

16.
Intelligent applications will be the
foundation of the next generation of
great software companies because they
will be the new moats.

17.
Thank you.
jerry@greylock.com
@jerrychen