Investing legend Warren Buffett often talks about his love for businesses with "moats" -- businesses than can sustain competitive advantages over a long period of time. And investors are wondering if medical scrubs maker Figs (FIGS -2.53%) has a moat for its fast-growing business.
In this video from Motley Fool Backstage Pass, recorded on Nov. 1, Fool contributor Danny Vena talks with Fool contributor Jason Hall about how Figs may not have a moat per se. But its brand is well loved and it's a first mover, which can give it an edge over other apparel companies.
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Jason Hall: There's a couple of questions here for you, Danny.
Danny Vena: Sure. I'm going to start with the Fool Fan's question related to The Rank show a few weeks back. Actually I think that was probably the IPO and SPAC show where I spoke about Figs.
Figs is a company that makes scrubs for medical professionals, and Fool Fan wants to know "what's the moat? Any apparel company can eat their lunch. No company has done it so far, but can do it. Thoughts."
My thoughts are that there was an opportunity for somebody to improve on the existing scrubs for decades and nobody did. When Figs came along and they made scrubs out of material that was not scratchy, that was more form-fitting, that had fun colors and textures and still did the job that you need scrubs to do. They have a very loyal fan base that's growing.
Yes, I think there is an opportunity for someone to eat into that space, but I don't think there's going to be one winner and I think scrubs has the first-mover advantage.
Hall: I don't think it's a kind of thing that your typical apparel company is really interested in going into. It doesn't fit within their retail strategy. It's not part of their brand and within. It doesn't make sense. You have to go find somebody to make the close. You're taking up time on your production facility for things that you already know how to make. Yeah I agree with you Danny.
Vena: Some of the other scrubs manufacturers are now trying to copy what Figs did. But in my opinion, it's too little, too late.