TIP727: 7 POWERS BY HAMILTON HELMER

W/ CLAY FINCK

05 June 2025

In this episode, Clay explores Hamilton Helmer’s 7 Powers framework, breaking down each of the seven sources of enduring competitive advantage. While companies all over the world offer benefits and value to society at large, few have barriers in place that prevent competitors from easily replicating those advantages. Whether you’re an investor or business operator, this episode is an essential listen to understand the critical ingredients for long-term success in business.

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IN THIS EPISODE, YOU’LL LEARN:

  • What it means for a company to have Power.
  • The power of scale economies.
  • Why network effects are one of the best competitive advantages a business can have.
  • Why counter-positioning is Hamilton Helmer’s favorite Power.
  • The types of switching costs that can keep customers locked in for years.
  • Why customers are willing to consistently pay up for a great brand name.
  • How companies can capture a cornered resource that even well-funded competitors are unable to replicate.
  • Why process power is the rarest of the all the powers.
  • A case study on Netflix and how they built multiple Powers outlined in the book.
  • And so much more!

TRANSCRIPT

Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

 

[00:00:00] Clay Finck: On today’s episode, we’re diving into what I believe is one of the most practical frameworks for understanding business strategy and competitive advantages, and that’s Hamilton Helmer’s book Seven Powers. Warren Buffett has long emphasized the importance of owning high quality businesses, and a key trait of these businesses is their ability to sustain high returns on capital over long periods of time.

[00:00:21] Clay Finck: To do that, they need a moat, but what exactly makes up a moat and what makes a business defensible and keeps competitors at bay? That’s exactly what Hamilton Helmer sets out to answer in seven powers after decades of investing in consulting, he distilled his findings into a clear framework that identifies seven distinct sources of enduring competitive advantages.

[00:00:43] Clay Finck: In this episode, we will walk through each of the seven powers in depth and explore examples like Netflix, Facebook, SAP, Tiffany, Vanguard, and Toyota. Without at least one of the seven powers, a business is destined to deliver average returns on capital and is vulnerable to disruption. So with that, I hope you enjoy today’s episode on Seven Powers by Hamilton Helmer.

[00:01:11] Intro: Since 2014, and through more than 180 million downloads, we’ve studied the financial markets and read the books that influenced self-made billionaires the most. We keep you informed and prepared for the unexpected. Now for your host, Clay Finck.

[00:01:34] Clay Finck: Welcome to The Investor’s Podcast. I’m your host, Clay Finck, and today I’ll be sharing the key takeaways I learned from reading Seven Powers by Hamilton Helmer, and hopefully you’ll pick up a nugget or two to add to your toolkit as an investor or a business person yourself. Helmer put together the seven powers framework.

[00:01:52] Clay Finck: After hundreds of consulting engagements and decades of active equity investing, he argues that a business without at least one of these powers lacks a viable strategy and is vulnerable to disruption. The seven powers covered in the book include scale, economies, network economies, counter positioning, switching costs, branding, cornered resource, and process power.

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