Peter Thiel's idea of evaluating a business.

a business create X% of value and capture Y%

X and Y are independent value.

most biggest innovations have their profits competed away, so the Y% is close to zero.

eg: railroad, airlines etc.

when he did paypal, he calculated most cash flow come from years later, thus it's important to evaluate whether business would still exit long after, rather than purely focusing on growth rate,

eg: a company can be doing growth at 100% a year and go out of business in 5 years time because of competition. thus it's not worth investing from an investor perspective.

therefore he likes business in monopoly because of Y% and business life expectancy.

that got me thinking, how do you know a business has defensible moat over the long run especially we live in a world where there is breakthrough in tech everyday, one way of him evaluating is whether the product has network effect.

while it's true, we simply do not know what is going to come along and new innovations can still disrupt everything,

eg: AI search to google search

(maybe not the best example as al search now complements google search to some extent )

there is a tweet from @naval

"Continuous learning is the only defensible moat."

doesn't this reach the conclusion of always investing in capable and ethical people, and that's almost the only determining factor?

tho in the book "poor Charlie's almanack", Charlie did say if you had to pick between good business and good management team, he would lean more towards good business.

I actually wonder if that is because he doesn't invest in businesses that have high multiples anyway (as he describes as having high margin of safety), therefore he leans towards the good business side, and it doesn't apply as much in tech companies.