Even if AI makes it easier to build competing software, incumbent SaaS giants retain customers due to immense switching costs. The operational disruption, retraining, and integration challenges of migrating a large organization create a powerful moat against new entrants.

In regulated industries like healthcare, the years required to build partnerships, navigate compliance, and establish trust create a significant moat. This defensibility protects specialized application-layer startups from being overrun by large, horizontal model providers who cannot easily replicate these deep, industry-specific relationships.

While it operates a technology platform, the company's most durable competitive advantage comes from its long-standing integration with regulatory bodies like the SEC and FINRA. This compliance acceptance creates a massive barrier to entry that potential competitors cannot easily replicate with technology alone.

In legacy industries like insurance and law, incumbents often claim their advantage is 'relationships.' In reality, this is often a euphemism for high friction and annoyance in switching providers. Customers stick with subpar service not out of loyalty, but because the effort of moving (e.g., finding 40 documents) is too high.

Startup With Coverage's innovation isn't just tech; it's a business model shift. By charging a flat service fee instead of commissions, they align incentives to find clients the best, most affordable insurance, unlike traditional brokers who profit from higher premiums.

Despite technologies like Zillow seemingly making them obsolete, real estate brokers have remained resilient due to market inertia and regulatory capture. This serves as a powerful counter-example to predictions of rapid, friction-less AI-driven job displacement in other white-collar professions.

The most "sticky" software is involved in core financial flows (like Stripe) or codifies complex regulations (like insurance or tax software). These systems are incredibly difficult to displace because they are tied to external forces like regulatory bodies, and the financial or legal risk of switching is too high for the customer.

AI won't disrupt all incumbents equally. Those who control structural constraints, such as the regulatory right of final sign-off in audit and tax, can protect their value proposition even if AI commoditizes the underlying knowledge work. This creates a defensive moat.

Twilio's strong performance post-SaaSpocalypse highlights that a durable moat for an infrastructure company isn't just its software. Its true defensibility comes from decades of cultivated relationships with mobile carriers and deep expertise in navigating complex global messaging and spam regulations—assets that cannot be easily replicated by an AI agent.