Rocket ships and tractors

Conversely, as Casper discovered, there is no particular reason why a company selling consumer products ‘but on the internet’ should have any higher margins than anyone else. It seems quite likely that the great consumer reset underway now will see the creation of all sorts of new retailers, brands and products, but it doesn't follow that they will... See more

Of course, all of this is really just describing the difference between high gross margin and low gross margin companies. These can both be perfectly ‘good’ companies (“there’s no such thing as a bad company, just a bad price”), but you have to remember the difference, and it’s surprisingly easy to forget. People really did think that Facebook woul... See more

If Facebook or Snap were rocket ships, Uber or Instacart are tractors - it’s all about the ratios. For these kinds of companies, you need to have a pretty good idea of the unit economics before you start.