Mình là một nhà đầu tư chất lượng…

…nghĩa là mình thích mua cổ phiếu của những công ty chất lượng…lol what an explanation…

… “Yo V you said it as if it made any fucking sense. Elaborate please?!”

Chất lượng ở đây là khi một công ty có cái mà sư phụ mình hay gọi là “hào kinh tế”, tiếng anh nó dịch là Economic Moat.

“The hell is that? ” …I figure you may ask…

…well the concept is pretty cool, so let me explain:

Thời xưa khi mà các vua chúa xây lâu đài họ sẽ muốn xây một cái hào thật to xung quanh cái lâu đài đó để bảo về nhà của họ khỏi những mối đe dọa. Threats here can be anything: from other kingdoms wanting to evade their castles and kidnapping the princess to aggressive animals wanting some human flesh for dinner.

Thời đấy thì chưa có máy bay nên “trộm” chỉ có thể xài đường bộ để tấn công lâu đài thôi. Vì thế để chống “trộm” thì những ông vua này sẽ đào những cái hào thật to. Hào càng to thì quân xâm lược hay chó sói, sư tử hổ báo gì đấy càng khó vào. Ngoài to ra thì mấy cái hào này có thể chứa một đống cá sấu chẳng hạn, kẻ xâm lược lại càng ngại tấn công.

This concept can be applied into the modern business world, explained by the master himself – Warren Buffett.

Một công ty có thể đào những cái hào kinh tế thật to để ngăn chặn competition from eating away their pie.

These companies with wide economic moats can be found anywhere in the world. From Coca Cola with its unique taste deterring competitors from ever stealing their number 1 soft drink position to Kone the top 5 elevator company with moat being the fact that customers cannot replace their elevators with a competitor’s products easily to Visa with moat being the impenetrable data centres (like literally impenetrable) that handle 30%-40% of the world global transactions (excluding China) or Unilever with the massive distribution scale that facilitates new product roll-out at a lightening speed at the lowest possible costs.

Những công ty kể trên either xây hào kinh tế throughout their lengthy lifetime hoặc họ là những người đi tiên phong trong ngành, hưởng lợi thế first mover advantage.

Nhưng mấy đứa này có bé chút nào đâu mà lại viết là “Nhỏ nhưng có võ” thế kia? Định câu like à?

Oh no no…so here is the story: mặc dù mình là nhà đầu tư chất lượng và điều này thường dẫn mình đến việc đầu tư vào các công ty to chà bá như kể trên, nhưng mình lại có nhiều bạn bè thân thiết làm hoặc thích làm ở start-ups.

Start-up is small, high risk investments with a high chance of failure and 100% chance of not having any sort of economic moat. They are just too small for any moat to be developed…Sorry for bashing start-up BUT don’t get me wrong! hear me out first…

Hồi 2 tuần trước mình ngồi xuống nói chuyện với thằng bạn thân hồi đại học. Thằng bạn đang làm cho một start up ở London và mình ngồi nói chuyện với nó tầm 2 tiếng về anything related to start-up…

…then I asked him “how do you think a start-up can build moats?”

If your start-up can build a moat or try to build a moat or prioritise building a moat rather than aiming to quickly scale up and exit there is a good chance you can be what Facebook, Apple, Starbucks or Nike today. These companies were once start-ups, probably on average 30 years ago and now they are the biggest companies in their industry.

A lot of them started out building economic moats without even realising it. Facebook aimed to attract users and advertisers which grow the network effect – a source of economic moat (discussed further below), Apple prioritised building a network across their hardware devices via IOS, app stores and the like which helped growing the users switching costs, Starbucks and Nike started out building their premium brands by converting what was once a commodified product (instant coffee and shoes) to a superior one.

…So làm thế nào để start-up đào hào kinh tế đây?

Dựa trên kinh nghiệm đó giờ đầu tư công ty chất lượng thì mình xin được nêu ra một số cách mà start-up có thể áp dụng để đào hào chống trộm:

Cách 1 – Lập hào kinh tế dựa vào switching cost

Switching cost là một trong những hào kinh tế khá thú vị mà mình pick up được trong quá trình đầu tư. Nói đơn giản là thế này: khách hàng sau khi xài đồ của bạn không thể or has little to no incentive to switch out from it.

Điều này có nghĩa là một khi bạn acquire được customers thì họ sẽ stay there for a long period of time until there is a very compelling reason for them to switch away from your service/product. During that time you can realise recurring revenue that protects your business from new entrants or existing competitors wanting to steal your market share.

Some examples include:

Visa offers payment processing services for banks. Once banks agree to use Visa’s network to execute transactions made by businesses and individuals they don’t/can’t switch from it. This is because all payments are now integrated to Visa network, changing it would mean disruption to daily purchasing/spending of businesses and consumers. Not to mention the low level of security provided by an untrusted payment processors. Mình hay joke  là nếu như data centers của Visa mà bị hacked hay bị làm sao đấy thì 30%-40% of the world transactions will now be vulnerable to theft, fraud or worst LOST! “Yo V that’s not a joke man. Learn the definition you dumb ass”

ABB Group supplies robotic hands that you can find in a car-manufacturing plant. These robotic hands play a crucial part in assembling a car and thus switching from it without a compelling reason other than lower cost would mean significant downtime which, if not handled appropriately could cost car manufacturers lots of money due to inability to meet demand. Moreover it would mean re-training staff with new equipment and/or the software that controls these robots in the first place.

Vậy làm thế nào để start-up apply được những điều trên:

Cung cấp một sản phẩm, dịch vụ mà integrate so much into users’ daily and critical activities that they can’t find any better reason to switch, even if other service/products are offered at a much lower price. Ví dụ như bạn đang làm 1 app về quản lý budget cho người tiêu dùng, bạn có thể nghĩ tới việc offer thêm các features khác quản lý cả investments, their family budget, saving hay tracking expenses chẳng hạn. Tất cả những features này là cần thiết for a person daily financial activities và vì thế khi người dùng quen sử dụng rồi thì họ sẽ không muốn thay đổi, tại vì làm thế would mean re-learning, re-entering details, re-training which would cost time, effort and money.

Cách 2 – leverage on the all mighty network effect

Network effect là một hào kinh tế mà ít công ty có được. Network effect is like buy one get one free. You add a customer to your network, a supplier or another customer also wants to join in, which in turn adds more customers and suppliers. It thus creates a vicious circle until you reach a massive customer and supplier base that competitors find it impossible to compete with.

Ví dụ:

Facebook – other social media platform won’t be able to compete with FB, at least in a medium term 5-10 years, simply because they have so many users. An user will be reluctant to switch to a new platform – let’s call it A, because there is a few to no one in platform A to mingle with. Ngòai ra càng nhiều users thì càng nhiều advertisers/businesses muốn xài Facebook platform để market their products and services. Càng nhiều advertisers/businesses would mean more features and contents, dẫn đến lại càng hấp dẫn người dùng hơn.

AutoDesk – that company that supplies AutoCad to designers and engineers. Càng nhiều người sử dụng thì autocad càng trở nên valuable hơn bởi vì users can now exchange their projects, files, ideas using “autocad” language and platform with one another.

Vậy startup làm sao để build được network effect.

Well always think of the other side of the equation. How can you acquire suppliers via your existing user base?  Bữa mình đi một cái start-up event do người Việt tổ chức mình có nói chuyện với một anh who co-founded this start-up app that recently got funded by a big airline group in the UK. App của ảnh đại loại là về letting users track their travelling journey when they travel which is pretty cool given that it will render notebook obsolete (lol) and also a pretty fun experience when you travel.

So I asked him what the next step is and he said he would look at enhancing users experience by letting them know all the cool places (restaurants, museums, hotels, other entertainment) when they are at a location via his app.

EXACTLY that’s the network effect right there, and he should be prioritising this. Bởi vì the more users use the app the more likely the app will be attractive to restaurants, hotels operators: these guys will want to advertise their services via his app because of the current user base, which would then attract even more users.

The key point here is to think about the other side of the equation, essentially this is: don’t just focus on growing your user base, think about how your user base can attract the other side – ie suppliers who can then help you to attract even more users.

Once you create this network it’s pretty easy to monetise it via the traditional advertising model used by many companies in the world like Google, Facebook and the like.

Cách 3 – BRANDING!

No it’s not about coming up with a catchy name or doing loads of advertising.

It’s about creating pricing power for your start up.

A brand doesn’t exist if you cannot price higher without hurting your volume sold. If a consumer goes “damn y’all increase price by 2% I’m not buying anymore bye bye” then your brand is pretty shit even though the name of your start-up might sound pretty fucking cool.

Example: Starbucks created brand by

1/having a core philosophy: dark roast high-quality coffee bean and never change that quality. They mean NEVER! They won’t use cheaper coffee bean to boost sales is what I’m trying to say.

2/ add any other features that help premiumrise the brand. Example: playing signature music composed exclusively for Starbucks, doing loyalty card and mobile app before any other coffee chain, offering fucking great free WIFI (gotta highlight this, so important init lol), exploring with different store concepts that help elevate the brand image – Starbucks Reserve as an example, producing innovative drink continuously, etc…

3/ watch the price and volume growth with a hawk eye: in the past 15 years Starbucks had raised its price 14 times and only in 1 year did the volume sold drop. (Measured by size of transactions and number of transactions). That sir is BRAND!

Build được một brand tốt không phải dễ, especially when you want it to be sustainable going forward. So it’s the least feasible one amongst start-up…but if you can build it hat-off to you sir because brand is the BEST economic moat that a business could have.

Conclusion: 3 cách, chọn cách nào cũng được. Nhưng nhớ chọn và đừng quên this golden word: ECONOMIC MOAT.

P.S: If your start-up ever gets big via building a moat remember to say thank you to Warren Buffett – the man who invented Economic-Moat investing in the first place.