The a16z Show Why AI Moats Still Matter (And How They've Changed)
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Dec 3, 2025 
In a thought-provoking discussion, Alex Rampell, a general partner at Andreessen Horowitz with a focus on fintech, and David Haber, who specializes in enterprise and AI, delve into the competitive landscape of AI startups. They analyze why 19 out of 20 startups fail and the unique challenges of building defensible software. The duo introduces the 'janitorial services paradox' and warns that momentum isn't a true moat. They also discuss the evolving role of AI in business and the importance of specialization in crowded markets.
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Software Now Buys Labor, Not Just IT
- AI shifts software TAM from IT spend to labor savings, creating new market opportunities.
- Differentiation comes from workflow ownership and becoming the system of record, not just model use.
Data Effects Are Gravity—Visible At Scale
- Data network effects only reveal themselves at massive scale like gravity.
- At subscale, many competitors look identical until one reaches mega scale and shows superior results.
Find The Goldilocks Market
- Target the Goldilocks zone where cost matters enough for customers to switch but not so small buyers ignore it.
- Focus on greenfield segments where incumbents are irrelevant and new customers are created.