Own the Demand

Business questions must begin with the customer. Platform owners, for example, may find it hard to identify their customers. Platform owners act as intermediaries between different market sides. By connecting the "sides," indirect network effects can be harvested. Buffett and Munger describe network effects as the strongest they have ever seen in G... See more

The second fundamental truth of data business models is this: whoever controls the data, captures the value. Intermediaries get squeezed.  A common failure mode is to build a business on top of somebody else’s data. If you depend on a single upstream source for your data inputs, they can simply raise prices until they capture all of the econom... See more

The internet enables Aggregators to shift the chokepoint in the value chain from supply to demand. The monopolies of the 20th centuries - U.S. Steel, Standard Oil, American Tobacco - exerted power through their control of supply. The largest companies in the 21st century are winning by first controlling demand, and using the strength and scale of t... See more

Pre-internet, middlemen thrived because they controlled supply. In retail, middlemen controlled shelf-space. In news, newspapers controlled publishing. And in music, record labels controlled distribution. So in this world, retailers, newspapers, and record labels were literal kingmakers, because without these middlemen, consumers wouldn’t have acce... See more

"All parts of our economy were previously based on scarcity. In almost every case, that scarcity has disappeared. The way you win on the internet is to be the starting place where people go - Google, Facebook, these aggregators - or you're highly differentiated and you leverage the fact that you have zero distribution to reach anyone."