Learning Moats Before Scaling Moats (Also, Matt Damon)

At a Glance:

• Companies that prioritize learning have a 10X better shot at success.

• ‘Scaling moats’ versus ‘learning moats.’

• Learning as competitive advantage.

• Three Matt Damon movies are embedded in this newsletter. Can you find them? 

“Since you’re the ‘get unstuck’ guy, what’s the one strategic thing I can do to avoid getting stuck?” - Recent question from a CEO

I get it. I harp on the inner work all the time. So here’s the best ‘outer’ thing to understand: 

Growth often doesn’t mean progress.

I didn’t know it at the time, but one of the most significant gifts of the Jive journey was being bootstrapped for five years. We had time and space to learn, experiment, and relate. No one breathing down our necks for growth metrics. We got to hang out with customers and bond with them. And growth happened.

Then I let fear take over. I saw competitors on the horizon and went the playbook route of overly aggressive scale. I created systems of growth, but demolished the system of learning and connecting.

That led to a slow demise, as it does for 90% of startups. But it doesn’t have to be that way.

A scaling moat versus a learning moat

A scaling moat is about leverage and networks, capital, processes, and market expansion. A learning moat generates experience, wisdom, connections, flexibility, and the foundation for long-term growth, if you’re patient enough.

Scaling moats defend what’s working. Learning moats create a system that adapts to changes, is rooted in value exchange, and forms deep relationships. And it becomes uncopyable. It naturally defends itself. 

Which do you think will be more valuable in the ever-shifting, overly automated world of AI? 

Behind the Problem

(You weren’t going to get off with a ‘no woo’ newsletter.)

Outside of the over-identification problem that drives people to associate company growth with personal validation, there are two primal human drives at play: tribal protection and resource scarcity. 

We see the world as a finite pie and want our slice. This leads to a company contagion of scaling prematurely, raising based on false premises, using terms like “land grab,” and setting the stage for downsizing, stuckness, and failure. 

But a learning moat is part of the “emotional market fit” process I’ve discussed that helps you understand and generate a web of relationships that becomes your advantage in the long run. 

Building a learning moat

1. Work with investors and board members who get it. Surround yourself with people who know what it means to learn and be patient, not people who see you as a chip on the craps table of investments. And push back on premature pressure for growth. 

2. Institutionalize curiosity. Make learning the essence of the business: celebrate victories, build roadmaps and operating plans around discovery. 

3. Be anthropologists, not analysts or pushy salespeople. Per my previous newsletter, go deep into your buyers' hearts and minds. Do “ride-alongs” and learn to empathize, love, and serve. 

4. Go leaner, longer. Don’t see fundraising as the answer to your problems. You’ll likely have to promise growth to get that money, and then you’ll be forced to play the wrong game. Fewer people, longer timeframe, less pressure. 

5. Reward adaptability. Make it safe to say, “we were wrong,” and for people not to be personally tied to specific decisions. Become black belts in human connection and navigate hard conversations quickly. 

6. Measure learning velocity. Track your strength at turning learning into innovation, processes, behaviors, or relationship growth. 

This isn’t easy. It requires true grit, but a company that learns quickly creates way more long-term value than competitors who stockpile fear and capital.

Most founders chase scale. The best ones seek learning and know how to measure it. 

It may look slower at first, but it’s how generational companies are built. 

With love, 

Dave 

Finding it hard to avoid the growth imperative? Hit reply - I'd love to hear your story.

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