The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage.
— Warren Buffet, Fortune, 1999
It’s a repost from few weeks ago. Last time it got good traction. After that I’ve written much in depth on this here so thought i’d reshare: [https://open.substack.com/pub/sharmakshit/p/growth-was-the-accelerant?r=2upvyp&utm\_campaign=post-expanded-share&utm\_medium=post%20viewer](https://open.substack.com/pub/sharmakshit/p/growth-was-the-accelerant?r=2upvyp&utm_campaign=post-expanded-share&utm_medium=post%20viewer)
Lately it feels like we’re debating whether an industry (ai) is the future (which it is) instead of whether a specific company can defend returns for 10+ years.
Even if the industry grows like crazy, competition can still crush returns. Growth isn’t rare durable advantage is.
Buffett’s mentioned in his 2007 letter that a far-sighted capitalist at Kitty Hawk would have done investors a favor by shooting Orville Wright down.
Because investors poured money into aviation attracted by growth when they should have been repelled by it. Hundreds of carriers went bankrupt. The industry’s aggregate return to shareholders over a century was negative. A transformative business. A terrible place to own the equity. In the substack
I broke down and explained the mechanism behind it why
