Alex M H Smith: Why your moat is crumbling

I think I was going to actually ask, I might start with a slightly different question than the one I was going to, because one of the things that I really took from your book, No Bullshit Strategy, and also your recent podcast, is the idea of what you call the K-shaped economy, but a different definition to what most people talk about, where you talk about how on one level you've got this oversupply of things, like there's an example about the App Store, 2.4 million apps on the App Store.

And this corresponding and almost sort of exponential collapse of demand.

And that's the area that we're in, right? So what does that mean for people now? What are you seeing in your clients and people you interact with?

Yes, basically what we're seeing everywhere is an explosion of supply and a, at best, flattening of demand.

The explosion of supply is, putting it very simply, down to lowered barriers to entry.

And of course, there are fields like apps, for example, where AI has destroyed the barriers to entry.

But Even if you look in kind of heavy manufacturing fields, you've got to bear in mind everything's relative, right? So like in automotive, like, yes, we don't have a million new cars being put on the road, but the number of car brands has roughly doubled or tripled in the last 10, 15 years.

So you get, so within the context of that industry, that is still exponential growth.

explosion of supply.

And meanwhile, we're faced with the unfortunate fact that there are only so many people.

There are only so many eyeballs.

There are only so many ears.

There's only so much money in their wallets.

There's only so many hours in the day.

And so people are not buying more cars than they were 10 years ago.

People are not downloading more apps than they were 10 years ago.

In fact, they're downloading much fewer apps because obviously AI has eaten half of the functionality of those apps or they get brought native onto those platforms.

People are not broadly doing more of anything now or buying more of anything.

For the most part, people are buying less of things.

But this corresponds to this supply explosion.

So look, it shouldn't be rocket science to think that how are you going to feel this as a business? You're basically going to find it harder to make money.

Your marketing performance is probably going to be the first leading indicator that things aren't right, where levers that you were pulling five years ago that were great suddenly aren't so great anymore.

You find it people's willingness to pay more is dropping.

You find it harder to convert sales.

You find it harder to get distribution listings, depending on what it is that you are selling.