A business moat refers to defensibility—what prevents competitors from winning customers with lower prices. The concept encompasses two distinct elements: stickiness (keeping existing customers through switching costs and contracts) and superior value proposition (winning new customers). While stickiness matters more for mature businesses, startups in new markets benefit primarily from superior value propositions.
The article argues that AI startups should focus on 'blind constraints'—problems that large foundation model providers structurally cannot address—rather than 'blind spots' they simply aren't prioritizing. The author suggests that cross-model solutions exemplify this approach, as foundation model companies lack incentives to build tools that work equally well across competing platforms.