The piece revisits the concept of business moats in the context of gross margins, emphasizing that high margins alone don't define great companies. Authors Alex Immerman and David George argue that defensibility is key, stemming from moats like network effects, economies of scale, strong brands, high switching costs, and proprietary tech. They note that while high gross margins can signal a healthy business, they don't guarantee long-term success. In the AI era, companies that move quickly to create valuable products are more likely to thrive, even if they operate with lower margins. The authors highlight a growing market divide between companies with high gross margins and those with low margins, where the latter are often overlooked by investors. They explain that while high margins allow for greater investment in growth and product development, a focus solely on margins can obscure the underlying value drivers of a business. Even companies with lower gross margins, such as Apple, Walmart, and Disney, can be highly valuable if they possess solid moats. The article provides specific examples of moats, starting with economies of scale, which can lead to cost advantages. Companies like Amazon exemplify this with their extensive distribution networks. Differentiated technology is another important moat; companies that can command premium pricing or hold intellectual property are better positioned. Network effects also contribute significantly to growth, as seen with companies like Uber and Lyft, where increased usage enhances the value of their services. The authors stress the importance of understanding and building moats, particularly for businesses with lower margins, to ensure long-term viability.