How to Talk About Your Moat the Way Investors Do
We’ve been listening to Business Breakdowns, a podcast where seasoned buy-side investors and analysts dissect companies in remarkable depth. These are people who spend their careers studying business models and identifying the edges that endure.
What stood out to us is how clearly they frame each company’s investment thesis, especially when it comes to explaining the moat.
There’s a lot we can learn from that. We keep going back to some of my favorite episodes on Costco, FICO, Ecolab and Vulcan Materials which are a clear reminder: the most thoughtful voices in the market are already operating at this level. If we can bring that same clarity and depth into IR materials, we are better able to communicate our company’s investment thesis in ways that influence and educate investors to take action.
Here’s how these investors describe the moats and what we can learn from them.
Costco’s moat: The Member-Value Flywheel
In the Costco episode, Zack Fuss (Continental Grain Company), emphasized the retailer’s model as a virtuous cycle: low prices → happy members → high renewal rates → scale benefits → even lower prices. He pointed to founder Jim Sinegal’s refusal to raise the hot dog price as symbolic of Costco’s culture of value.
As Zack put it, “If you have happy employees and they’re willing to take care of the customers, that’s gonna drive the customers to spend more.” That culture of service underpins the flywheel of loyalty, efficiency, and membership renewals.
IRO takeaway: Make your flywheel explicit. Investors want to see how customer value translates into financial value.
FICO’s moat: Network Effects and Switching Costs
In the FICO breakdown, Dev Kantesaria (Valley Forge Capital Management) explained that the credit score is not just consumer-facing, it is infrastructure. FICO is entrenched in underwriting, referenced in securitizations, and tied into how banks and regulators manage credit risk.
He noted that FICO scores are “sold into each of these different categories: mortgage, auto, credit card, personal loans” and across multiple customer types. In practice, it is embedded everywhere in consumer finance, making replacement costly and complex. Competitors exist, but switching away almost always penalizes adopters.
IRO takeaway: If your product is foundational to your industry’s operations, highlight that integration. Depth of entrenchment is itself a moat.
Ecolab’s moat: Embedded Salesforce Driving Customer Stickiness
As Todd Wenning (KNA Capital) explained, Ecolab’s very name, Economics Laboratory, reflects its DNA: solving customer problems scientifically to save them money. That philosophy still defines the company today.
“Their culture is sales-driven,” Wenning observed. Out of 48,000 employees, about 28,000 are in sales and service roles, while only around 4,000 sit at headquarters in Saint Paul. That massive field presence means account managers are embedded in client operations, solving daily problems in hygiene, water, and energy management. In many cases, Ecolab installs equipment at new sites, such as datacenters or quick-service restaurants, making its solutions part of the operation from day one. The result is operational trust and very high switching costs. Wenning also stressed the direction of the moat: as water scarcity intensifies, Ecolab’s positioning makes its advantage stronger over time.
IRO takeaway: When your moat comes from a human engine, highlight it. Show how your people, proximity, and problem-solving translate into loyalty and durable economics.
Vulcan Materials’ moat: Scale and Barriers in Aggregates
Aggregates, the crushed stone, gravel, and sand used in concrete, asphalt, and construction, are Vulcan’s business. In the Vulcan episode, Rob Hansen (Vontobel Asset Management) laid out the company’s simple but powerful moat: quarries. Aggregates are heavy and costly to transport, which makes markets hyper-local.
As Rob put it, “Every 40 miles you travel by truck, the cost doubles because it’s about 25 cents per ton mile.” With reserves that “have fifty to seventy year lives,” Vulcan’s assets are long-lasting and defensible. Scale and balance sheet strength let Vulcan buy quarries, invest through long permitting cycles, and predict where demand will rise, advantages smaller competitors simply cannot match.
IRO takeaway: If your moat rests on physical assets, capital intensity, or regulation, show how scale makes those barriers even harder for rivals to cross.
A Final Thought for IROs
The best investors make their case in clear, confident terms. As IR professionals, our job is to do the same. Pay attention to your moats. Show why they endure and how they create value. When you articulate your edge as clearly as the smartest voices, like the savvy investors we hear from, investors will carry that story with conviction.
If you found these insights useful, you might enjoy the full episodes:
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