The Paradox of the "Leaky" Bucket

In the classic "Art of War" school of business, we’re taught to build high walls, dig deep moats, and guard our intellectual property like a dragon guards its gold. The goal is simple: Capture. Every. Cent.

But if you look at the titans of the last decade, the most defensible businesses haven't been built by hoarding value, they’ve been built by giving it away.

Tim O’Reilly’s principle "Create more value than you capture" isn’t just a feel good mantra for social entrepreneurs. It is a cold-blooded, high performance strategy for building a platform that is nearly impossible to disrupt. When you create a surplus of value for others, you aren't being "nice"; you are becoming load bearing infrastructure.

The Anatomy of the Generous Moat

A traditional moat (like a patent or a high switching cost) keeps competitors out. A Generous Moat makes your customers and partners so successful that they have a vested interest in your continued dominance.

1. The Microsoft Pivot: From "Cancer" to "Core"

In the early 2000s, Steve Ballmer famously called Linux "a cancer." Microsoft's strategy was total capture. Fast forward to the 2020s under Satya Nadella: Microsoft is now the largest contributor to open source in the world.

By acquiring GitHub and making VS Code free and open source, Microsoft stopped trying to force developers into Windows. Instead, they provided the tools for developers to succeed anywhere.

• The Result: Developers became addicted to the ecosystem.

• The Data: Microsoft’s market cap soared from ~$300B in 2014 to over $3T by 2025. They captured a smaller percentage of the total developer value chain than they did in the 90s, but they helped grow the total pie so much that their "smaller" slice became exponentially larger.

2. Meta’s Llama: The Open Weights Gamble

Perhaps the most aggressive modern example is Meta’s release of the Llama AI models. While OpenAI and Google built "closed" gardens, Mark Zuckerberg released the weights of Llama 2 and 3 to the public.

• The Logic: By "giving away" a model that cost hundreds of millions to train, Meta effectively turned the entire world’s developer community into their unpaid R&D department.

• The Moat: Every time a startup optimizes Llama, they are strengthening Meta’s ecosystem and ensuring that the industry standard isn't a proprietary model owned by a competitor. Meta created billions in value for the AI ecosystem, and in return, they ensured their own social platforms would never be beholden to a third-party AI monopoly.

Why Generosity Scales Better Than Greed

When you capture 90% of the value you create, you are essentially a tax on your customers. Eventually, they will find a way to revolt or bypass you.

It’s a bit of a mind bender because we are conditioned to think that more profit percentage equals more success. But in the world of platforms and "Generous Moats," the math works differently.

Let’s break down the logic of the "10% Capture / 100x Creation" model.

The Math of the "Bigger Pie"

Imagine you have two choices for your business:

• Choice A (The "Extractor"): You create $1,000,000 worth of value. You are very efficient at charging for it, so you capture 90% of that. You make $900,000.

• Choice B (The "Enabler"): You create a platform so powerful it generates $100,000,000 for your users. You only capture 10% of that. You make $10,000,000.

Even though your "percentage" is much lower in Choice B, your actual bank account is 11x larger. More importantly, you have created $90M in wealth for other people. Those people now have a massive financial incentive to make sure you never go out of business.

The Bottom Line for Founders

If your product is a "toll booth," someone will eventually build a bypass. But if your product is the "pavement" that makes everyone else’s car drive faster, they’ll keep paying for the maintenance forever.

Being "generous" in business isn't about charity; it’s about alignment. If your success is a prerequisite for your customer's success, you don't need a moat. You are the ocean.

Featured Story:

Our community is already beginning to build its own "Generous Moat." Reader Muhammad Mobashir reached out last week to share a brilliant tool he built using Replit. Muhammad didn't just read the archives; he engineered a way to interact with them.

He built an app that scrapes the Faster newsletter and transforms the entire content library into categorized PDF and JSON formats. By feeding this structured data into ChatGPT and NotebookLM, he essentially created a Digital Twin of the newsletter,a custom AI brain that can be questioned, audited, and brainstormed with in real time. Once done here, it can be replicated across other sources and you can go crazy building co relations once you have the data.

Click here to explore Muhammad’s app.

Quick Wins: Recommendations & Discoveries

Book | Unpopular Culture: The Ritual of Complaint in a British Bank

The Book & The Lesson

What it is: A deep dive ethnography by an anthropologist who spent months inside a massive British bank, documenting how employees actually interact when management isn't looking.

The Lesson: It reveals that a company’s "true culture" isn't found in mission statements or "values," but in the specific, ritualized ways employees complain to each other; for founders, this means culture is a social defense mechanism, and trying to "fix" it with top down mandates often only creates more cynical, underground rituals.

Why Founders Need It

Most founders think culture is something they install like software. Weeks argues that culture is more like a biological immune system. The "ritual of complaint" is how employees bond and create a sense of belonging in the face of corporate pressure. If you don't understand the "complaint language" of your early hires, you will never truly understand why your "perfect" processes are being quietly ignored or sabotaged.

Tool | Stigmergy 

To build a Generous Moat, you have to stop acting like a micromanager and start acting like an architect of ecosystems. This is where Stigmergy comes in. Originally used to describe how ants build complex nests without a "boss" (they simply respond to the pheromone trails left by others), in business, it represents the shift from centralized control to indirect coordination. When you design for stigmergy, you aren't just providing a service; you are building a "persistent environment" where every action a user takes leaves a "trace" that makes the platform more valuable for the next person. It’s the difference between a grocery store (where you buy and leave) and a community garden (where your planting makes the soil richer for everyone else).

The Stigmergic Design Checklist

Ask yourself these five questions to see if your product is building a self-sustaining value loop:

[ 1] The Persistence Test: Does the value created by User A remain visible and usable for User B after User A has left the platform? (e.g., a review, a template, or a code snippet).

[2 ] The Low-Threshold Stimulus: Is it incredibly easy for a new user to "pick up the trail" and contribute their own small layer of value without needing a manual?

[ 3] The Self-Interest Alignment: Does the user create this "trace" as a byproduct of solving their own problem, rather than as a favor to you?

[ 4] The Frictionless Feedback Loop: Does the environment automatically reward the contributor (through status, utility, or data) the moment they leave their "trace"?

[5 ] The Decay Resistance: Does the collective value of these traces grow faster than the "noise" or "clutter" they create?

Contrarian Corner | The Founder and the "Trouble Tree"

I recently read some where that an investor spent the day with a founder whose company was, quite frankly, on fire. By 5 PM, a key investor had pulled out, their main server had crashed, and their top engineer had handed in their notice.

The ride home was a heavy, stony silence.

When they pulled into his driveway, he expected him to storm inside and spend the night glued to Slack. Instead, he stopped at a small maple tree by his front porch. He stood there for thirty seconds, eyes closed, touching the tips of the branches with both hands.

Then, he opened the door and underwent a total transformation. The "War-Room Founder" vanished. He was beaming, wrestling with his kids on the rug, and actually listening to his wife.

When he walked the investor back to his car later, he had to ask: "What was with the tree?"

"That’s my Trouble Tree," he said. "I can’t stop the fires from starting at the office, but I’ve learned that those fires don’t belong at the dinner table. So, I hang my troubles on the branches every night. I tell myself they’ll be there in the morning, and I trust that I’ll be better equipped to handle them then."

He smiled. "The funny thing is, when I come out in the morning to pick them back up, half of them have usually fallen off. They weren't nearly as big as I thought they were when I hung them up."

Community Spotlight

The most common mistake in modern business is confusing an audience with a community. An audience is a group of people facing you, waiting for a broadcast; a community is a group of people facing each other, using your product as the campfire. To build a "Generous Moat," you must pivot from being a Mirror, where you simply reflect and solve your customers' problems to being a Window, where you allow your users to see, help, and build alongside one another. This is the ultimate defensibility because while code and features can be cloned, the shared history, "inside jokes," and peer-to-peer trust of a tribe cannot be automated or bought. In a world of AI generated noise, human belonging is the only asset that doesn't commoditize. If your business vanished tomorrow and the conversations between your users stopped, you didn't have a community, you had a mailing list. The most profound act of "Generosity as a Moat" is letting go of the microphone so your users can finally find their own voice”

Thought of the Week:

This week, reflect on the words of Lewis Hyde: “The gift must always move.” In a traditional market, we are taught that value is a liquid to be captured and stored in a tank the more you hold, the wealthier you are. But in the world of networks and ecosystems, value is more like a current of electricity; it only generates power while it is in motion. When you hoard value, you create a "dam" that leads to stagnation and resentment from those downstream. When you allow value to flow through you, by giving away your best insights, empowering your users to build their own businesses, and creating a surplus for others you aren't losing wealth; you are increasing the "voltage" of your entire network. The most "defensible" founders are those who realize that their personal success is merely a byproduct of the velocity of value they facilitate for everyone else.

Better Outcomes to all…

-Faizan…