Level 3 Aggregators: Zero Supply Costs: Level 3 Aggregators do not own their supply and incur no supplier acquisition costs (either in terms of attracting suppliers or on-boarding them). Google is the prototypical Level 3 Aggregator: suppliers (that is, websites) are not only accessible by Google by default, but in fact actively make themselves mor... See more

One of the most common refrains that API-first businesses hear is, “Oh Company X will just build that in-house,” and yet, they almost never do. It’s not for lack of resources. Facebook generated more profit in 2019 ($57 billion) than Twilio’s entire market cap ($51 billion). It’s that once they’re integrated into a customer’s product, API-first com... See more

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