Hello, I'm a bank screw. Welcome this issue of screws to take you to learn.
Screws Take You to Read also spent more than 60 issues with you/kloc-0, explaining many interesting and classic books and stories for you, such as Money Without Work, How to Read, Overcoming Procrastination and so on.
I also introduced several investment masters in detail: Warren Buffett, his good partner Charles Munger, and John Berg, the father of index funds. They shared their life experiences, investment careers and investment ideas.
You can click on the link below to see some screws that take you to read the highlights:
On World Book Day, 40 books are given to you with screws.
Looking back:
The first article: "Buffett's moat theory, why is it important for investment?" | Screw takes you to read "
The second part: "The bigger the enterprise, the more worthwhile it is to invest: scale advantage | screws take you to school"
The third article: "Why the second child must die: the network effect of winner takes all | screws take you to school"
Chapter four: The secret of getting rid of involution in the industry: intangible assets, intangible moat | screws take you to school.
Usually screws often deal with people in two industries, one is an internet company and the other is a financial company.
Found a very interesting situation,
For example, to make a speech, you need to make a demonstration.
Apple's similar software is Keynote, and Microsoft's similar software is PPT.
There is no way to open the file made by Keynote directly under Microsoft system.
Over time, people use PPT more.
In fact, in the 1990s, when working as office software in China, WPS was the main force.
Later, Windows entered China, adopted the mode of bundling sales, and with the Office suite, PPT quickly became popular.
Most people start with Microsoft Office suite when they come into contact with it, and it is more difficult to switch after they get used to it.
Whether it is WPS or Apple's Keynote, the market share is not as high as PPT.
When customers move from the products of Company A to the products of Company B, switching costs will be incurred.
When the switching cost is high, people don't want to switch.
This kind of resistance will make customers stay for a long time and turn into profits.
The most typical case is where to buy funds and stocks.
There are many investors. At first, they opened accounts in Alipay or Tian Tian Fund. Since then, they may have been investing in this account and will not think about changing homes frequently.
This is the switching cost.
The same is true of bank accounts.
Although it is easy to open a bank card, most people are used to using their most commonly used cards.
In the past, banks paid great attention to going to college and issued the first card to students, because which bank to give it to for the first time had a great influence on later use habits.
There are also phone cards, home broadband and so on. , has a similar effect.
Sometimes the broadband at home is not easy to use, but I feel that it is too troublesome to change it.
This is also the switching cost.
Switching costs are also common moats.
Sometimes this moat also exists in industry software.
For example, when making investments, financial terminals are often used.
Financial terminals are a good business. Once you get used to using the functions and data of a financial terminal, you will rarely switch.
Including many financial companies, will also designate employees to use the corresponding financial terminals.
For example, US stocks often use Bloomberg Financial Terminal, which is the largest financial information service provider in the world.
In China, there are similar financial terminals, such as Wonder.
Being a friend of a designer is even more deeply felt.
Like the commonly used PS software, once you switch to other software, you need to relearn and train a lot.
The conversion cost is high.
For example, a few years ago, there was a slogan in the banking system, calling for IBM to achieve localization.
Because the back-office systems of many banks at that time were basically developed by IBM.
However, it is very long and expensive to replace the back-office system of banks with domestic systems.
Not only the cost of money, but also whether there will be accidents and errors in the process of data migration once the program is redeveloped, all of which need to be reconsidered.
Although I feel that I can exchange a lot of money, the conversion cost in the middle is really too high.
Enterprises need to make great determination.
However, switching costs do not exist in all fields.
In the retail industry and consumer industry, the conversion cost is not high, and we usually rely on the brand effect and scale effect we introduced before to build a moat.
Therefore, how to build a moat is often related to the characteristics of the industry itself.
Author: bank screws (please get my authorization to reprint, and indicate the author and source)
PS: Friends who are interested in index funds, welcome to read the investment guide of index funds and the financial freedom of fixed investment for ten years.