Moats vs. moonshots: The Warren Buffett-Elon Musk style debate

(This is the Warren Buffett Watch newsletter, news and analysis on all things Warren Buffett and Berkshire Hathaway. You can sign up here to receive it every Friday evening in your inbox.) MOATS VS. MOONSHOTS The critical Buffett-Musk debate Newly minted trillionaire Elon Musk knows a lot about rockets, electric cars, and posting messages on social media. In 2018, however, Warren Buffett questioned whether Musk knew as much as he should about "moats," the term Buffett had been using for years to describe an enduring competitive advantage, often a strong brand with a favorable "share of mind," that allows a company to remain reliably profitable over time. It started in early May during Tesla's quarterly earnings conference call. An investor asked Musk why Tesla was willing to open its extensive network of Superchargers to vehicles made by competitors: "I feel like the charging infrastructure you guys have built would take years and millions of dollars for another brand to replicate, so I'm just curious about the strategic thinking behind opening that up versus keeping it closed." Musk replied, "First of all, I think moats are lame. It's nice, sort of quaint in a vestigial way. If your only defense against invading armies is a moat, you will not last long. What matters is the pace of innovation. That is the fundamental determinant of competitiveness." At the Berkshire Hathaway shareholders meeting a few days later, Buffett conceded, "Elon may turn things upside down in some areas," but quipped, "I don't think he'd want to take us on in candy." Musk then seemed to take up the challenge, posting he was "super super serious" about starting a candy company. Becky Quick asked Buffett about it all when he appeared live on CNBC two days after the meeting. BECKY QUICK: Elon Musk was brought into the conversation this weekend at the shareholders meeting by a question — and I forget who asked it, one of the shareholders maybe — bringing up this idea — or maybe — maybe it was Andrew. But somebody brought up this idea of moats. Competitive advantages and moats. Elon Musk recently said that he thinks moats are stupid. People — WARREN BUFFETT: I wish he could give me his. (Laughter) BECKY QUICK: And that became a subject where Charlie weighed in and said, yes, he's right that actual moats around castles are stupid. But you guys got into a little bit where you were joking around, saying that you'd like to see him try and get into a candy store. He responded this weekend with some tweets, saying, "I'm starting a candy company & it's going to be amazing. I am super super serious. It just occurred to me that the plot of Willy Wonka is really messed up. Ok ok, just for the sake of argument, what do u wish for in candy? Cryptocandy. Then I'm going to build a moat & fill it with candy. Warren B will not be able to resist investing! Berkshire Hathaway kryptonite… I'm killin me lol" WARREN BUFFETT: Well — BECKY QUICK: What do you think about all of this? WARREN BUFFETT: Well, if you look at the leading candy bars, for example, for the last 50 years, I think you'll find Snickers on top. And then you've got M&M's. You've got two types. So they don't combine the peanuts with the other ones. But I think they're number two and four. And, you know — Hershey's in there at number three or something of the sort. Yeah. I can't take them on. (Laughter) I don't — I don't think Elon can take them on. You know? (Laughs) They have moats. When you go into a drug store, a 7-Eleven, or something and you say, I would like a Snickers bar, and the owner says, oh, I've got something — the Musk Bar — at 10 cents off the Snickers bar, you say, give me the Snickers. And if he doesn't give you the Snickers, you go across the street and buy the Snickers. Brands are moats, I mean, obviously. And if you try to — you know — this product is selling, you know, to hundreds of millions of people who want Coca-Cola. And if you say, I'll sell you something for two cents less, or I've got some celebrity's name on it — They actually — Richard Branson tried Virgin Cola in the United States about 15 or 20 years ago. And a million others have been tried. So I don't really have the same urge to produce automobiles that he apparently has to — (laughs) — produce candy. But I don't suggest that he take on Snickers. BECKY QUICK: You're taking me literally and stepping away from the real story here, which is kind of this war of words between you and Charlie and Elon. And I just want — do you even know Elon Musk? WARREN BUFFETT: I've never said anything to anyone about Elon. I mean, you know — you're baiting me a little bit to do it, but — BECKY QUICK: I am. WARREN BUFFETT: But I've never — you know, I — people like his car and everything, but — But somebody mentioned that now he's talking about financing. Something this morning about that. I thought I heard that earlier. BECKY QUICK: Yes. Well, actually, Warren — Andrew just read some headlines where it looked like they may be — Tesla — may be going back to market to pick up some additional financing. I'm not entirely sure. WARREN BUFFETT: Well that's — BECKY QUICK: All I heard was the — all I heard was the headline. WARREN BUFFETT: That's what I call a counter-revelation. I mean — (laughs) — you know, because I think it was just a few days ago they said they wouldn't need financing. It — But, you know, he's trying something to improve a product. And I salute him for that. And the American public will decide whether it's a success. And — it's not easy. You know? So a lot — It's probably easier to develop a new car than it is to compete with Snickers. But some products have terrific moats, you know. Probably Elmer's Glue does. You know, WD-40. I mean, there you go. You can — there's just certain things that you are not in — much inclined to be dissatisfied with and seek — and I would say that, incidentally, that the iPhone, you know, has a terrific moat. I mean, people that have an iPhone — or maybe have some other phone. But they want to continue with the product that they've got. They want the new version. It's just easier for them. They've learned how to do everything, and their life's built around it, and all of that, and — Moats are very useful. Costco has a moat in people's mind. I mean, you know — Amazon can raise the price of Prime, you know, 20 percent. And you can't do that unless you've built something within that image of the Amazon Prime, that's based on reality, that you're going to get a lot for your money and you're going to want to use it. And then you can raise prices $20. But if you're selling, you know, if you're selling some commodity product, you can't do that. You need a moat. The debate the two men sparked eight years ago was even picked up by the Harvard Business Review and has continued online with posts and videos. 'AI-powered' GEICO Gecko answers questions on podcast Buffett believes effective advertising can generate the strong brand identity that makes a moat effective. Berkshire's GEIKO insurance subsidiary is a good example with its ubiquitous Gecko. This week the company is promoting the character's first "live, unscripted conversation" as it appeared as a "real-time, AI-powered participant" on a video podcast hosted by the WNBA's Azzi Fudd, who plays guard for the Dallas Wings. GEICO has a multiyear partnership with Fudd, calling it a "cornerstone of its growing investment in women's sports." The company's release says it "developed the experience deliberately and with human oversight" and the Gecko's "character, voice and creative direction remain guided by the teams behind the brand." BUFFETT & BERKSHIRE AROUND THE INTERNET Some links may require a subscription: - The Motley Fool on Yahoo Finance: Berkshire Hathaway CEO Greg Abel Is Venturing Into an Area of the Stock Market That Warren Buffett Largely Shied Away From. Here's Why Investors Might Play Along. - Investopedia: Buffett's Recommended Portfolio Looks Very Different From 60/40—Here's How the Results Compare - Insurance Business: GEICO fills last major leadership gap with CFO hire BERKSHIRE STOCK WATCH Four weeks Twelve months BRK.A stock price: $732,100.00 BRK.B stock price: $489.25 BRK.B P/E (TTM): 14.57 Berkshire market capitalization: $1,051,476,084,256 Berkshire Cash as of March 31: $397.4 billion (Up 6.5% from Dec. 31) Excluding Rail Cash and Subtracting T-Bills Payable: $380.2 billion (Up 3.0% from Dec. 31) Berkshire repurchased $234 million of its shares in Q1 2026. (All figures are as of the date of publication, unless otherwise indicated) BERKSHIRE'S TOP EQUITY HOLDINGS - Jun. 12, 2026 Berkshire's top holdings of disclosed publicly traded stocks in the U.S. and Japan, by market value, based on the latest closing prices. Holdings are as of March 31, 2026, as reported in Berkshire Hathaway's 13F filing on May 15, 2026, except for: - Alphabet, which includes the $10 billion in shares that Berkshire agreed to buy directly from the company, as announced on June 1, 2026. Berkshire has not yet formally disclosed whether the transaction has been completed. The entry is a combination of Class A and Class C Alphabet shares. The market price is a weighted average of the prices of the two classes. - Mitsubishi, which is as of April 30, 2026 The full list of holdings and current market values is available from CNBC.com's Berkshire Hathaway Portfolio Tracker. QUESTIONS OR COMMENTS Please send any questions or comments about the newsletter to me at [email protected]. (Sorry, but we don't forward questions or comments to Buffett himself.) If you aren't already subscribed to this newsletter, you can sign up here. Also, Buffett's annual letters to shareholders are highly recommended reading. There are collected here on Berkshire's website. -- Alex Crippen, Editor, Warren Buffett Watch