High-quality business model
Quality is the ability to generate sustainable profits over long periods of time, through downturns and disruptions. It takes two things:
- A durable moat. Intellectual property, regulatory barriers, switching costs, network effects or embedded technology. It doesn't need to be the widest moat, but it must be stable and unchanging over time.
- A profitable model. One that keeps delivering above-average returns on invested capital, year after year.
