Own the Demand

In short, if somebody successfully inserts themselves between you and your customer, they can exercise tremendous control over you, including taking a big chunk of your profits or outright killing you.

Forbes recently published this widely circulated article about how Kylie Jenner built a $900M e-commerce cosmetics empire, all while outsourcing every aspect of her business — except marketing 

Another reason to focus on demand is that it can pull supply much more effectively than supply can pull demand. It is not the case that “the world will beat a path to your door if you build a better mouse-trap” — but if you gather everybody with a mice problem in one place, I guarantee it will soon turn into a convention for better-mouse-traps inve... See more

This is one key insight in Ben Thompson’s famous Aggregation Theory: modern marketplaces get their power from aggregating the demand side. And that’s a much better position than the old way of trying to own the supply side.

Goldman Sachs analyst Rod Hall reckons Google will pay $9B to Apple this year to remain iOS’ default search engine — an amount that could go up to $12B next year (source). By comparison, Microsoft’s search engine Bing generated $7B in revenue in 2017. So Apple’s “search engine business” is 28% larger than Microsoft’s — all while, you know, having n... See more