The Diff | Byrne Hobart | Substack

But there's a lot of overhead to creating and maintaining that network; GLG has to find people, vet their expertise, and, in recent years, find a way to ensure that people don't share information they shouldn't. The expert network business has gone through two booms: GLG started in 1998, with an original model of publishing deeply researched indust... See more

GLG has a network of a million industry experts, on topics that range from cloud computing to chemical engineering. They connect those experts to 60,000 users at 2,700 companies, who call them up in order to vet product ideas, research companies, and understand industries.

It's a valuable service, and that value is compounding: physical supply chains are getting more complex, but so are software and service supply chains, so there's an increasing amount of specialized knowledge in the world that needs to be intermittently accessed. That kind of access can be bought wholesale, but sometimes it's only necessary a la ca... See more

The service is still valuable, and getting more so, but there aren't strong forces driving the expert networks to be much less fragmented than the people they connect their clients with. There are still advantages to scale, and of course the biggest network will be able to find more unique people to contact than the smaller ones, but the unique-tal... See more

There are reasons to like the industry: GLG reported $589m last year, and its cost of revenue line was $155, which mostly consists of the cost of paying experts for those calls, for a gross margin of 74%. As a few people have pointed out, this gives GLG one of the highest take rates of any company, possibly second to Getty Images but possibly, depe... See more

LinkedIn may have been a big reason for this: when GLG was getting started, coming up with a list of people who'd worked in, say, oil refining, or aircraft maintenance, or in billboard ad sales was not easy, and being able to offer people from any of those industries on demand was a competitive moat. Now, $80/month for LinkedIn Premium is enough to... See more

An interesting variant on this is Tegus, which offers more affordable expert calls and makes their transcripts available to suppliers. For someone with an edge in asking questions, this is a downside, but for someone who merely wants to gather information, it's upside; they're free-riding on the question-asking skills of other people.

It's generally true that you can learn a lot by reading, but a conversation can be an incredibly valuable complement, especially if it tells you what to focus on.

What this means is that there's a period early in a company's life when investors have a larger-than-usual opportunity to get a competitive advantage by understanding the industry better than anyone else in the public markets. Since most companies are not completely unique, and even the ones that are have suppliers and customers, a few expert netwo... See more