Warren Buffett, who I'm told knows something about investing and businesses, talks about See's Candy, the House of Mouse, and building wide moats to increase market share.
(His observations on Disney begin at 3:46 ...)
Warren gave this talk in 1998 at the University of Florida.
One of the most telling parts of his answer comes right at the end of this segment, where Mr. Buffett says if a See's Candy clerk snarls at a customer, that creates a negative impression for See's in the customer's head, and the "protective moat" for See's candy business has just been narrowed.
And I flashed on Disney Animation during this period. The animation department had started on a downslope, turning out animated features that fewer and fewer people wanted to see. (The era of Little Mermaid, Aladdin, and Lion King was behind it.)
The Disney moat was being narrowed ... while the new studio Pixar was widening its water barrier ... because of the quality of product each studio was turning out. This trend continued until Disney CEO Eisner departed the company when Disney stock flatlined and Roy Disney campaigned for Eisner's ouster; soon thereafter, Disney's new chief bought Pixar for $7.5 billion.
Funny how the quality of a handful of animated features can widen and narrow moats, propel (or sink) careers and create fortunes. Brand names, even well-known ones, are fragile things.