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For example, Zynga grew up on Facebook’s growth. Or rather, drove Facebook’s growth. At one point, over half of the United States was playing Zynga games. For a while, Zynga’s incentives were aligned with Facebook: Farmville, a Zynga game, became a viral hit. So much so that people would convince their friends to get a Facebook account just to play... See more

But other platforms introduce other risks. Creator-led businesses (with Twitch streamers) might have less platform risk. If they have a strong connection, their fans will follow the creator across platforms. But, those creator-led businesses introduce “key person” risk: if something happened to the creator, the business would be worthless. There’s ... See more

In 2012, Zynga’s stock plummeted. While there were several reasons (games are a hit-driven business, talent left due to IPO payouts, etc.) one of the main ones is that Facebook games were down. Investors didn’t like that Facebook was so dependent on another company for it’s revenue, so Facebook adjusted their strategy to diminish the power of Zynga... See more

Each of these platforms has different risks. Thrasio’s biggest risk with Amazon is platform risk. To mitigate that, they could spin up Shopify stores for each of their brands and slowly migrate them off of Amazon. Or they could hope that regulators keep Amazon from changing their ranking algorithms.

Thrasio represents a new kind of roll-up: a digital roll-up. They are buying small businesses built on one of the largest online platforms in the world. With it, they will capture economies of scale.