The Moat Map

When balance matters in a mature two-sided business, the pricing problem is much more complex than in a single-sided business. Marginal cost and price responsiveness on both sides matter for both prices, and so does the pattern of indirect network effects. In general, if side A cares more about side B than B cares about A, then, all else equal, A w

... See more

The pipelines—value chain supplier, for example, Nokia and its rival traditional phone makers—lose out to the new platform providers. When the market leader changes from a pipeline-only business to one that adds a platform, 80/20 gravitates remorselessly to 90/10 and then on toward 99/1. Besides platforms being so much more profitable than pipeline

... See more

The Internet has made distribution (of digital goods) free, neutralizing the advantage that pre-Internet distributors leveraged to integrate with suppliers. Secondly, the Internet has made transaction costs zero, making it viable for a distributor to integrate forward with end users/consumers at scale.

This has fundamentally changed the plane of com

... See more

Long-time readers know that I already summed up this phenomenon in Aggregation Theory, but in some respects I think my chosen name does this idea injustice: the word “theory” sounds abstract and disconnected from the real world, when in fact the elements of Aggregation Theory are not only very much real phenomena but also the connective tissue tyin... See more