Modern Monopolies
Alex Moazed & Nicholas L. Johnson
2016
What It Takes to Dominate the 21st Century EconomyPrologue
Story of Nokia and BlackBerry vs. Apple & Android
Chapter 1 - Platforms are Eating the World
Platform attributes
- Audience building
- Matchmaking
- Providing core tools and services
- Setting rules and standards
Exchange platforms vs. Maker platforms
Commoditized platforms vs. Noncommoditized platforms
- Noncommoditized services platform should focus on facilitating easy search and discovery for its users rather than automatic matching.
- Commoditized services platforms should be responsible for setting prices to ensure its users receive the optimal price.
Chapter 2 - Hayek versus The Machine, or Why Everything You Think You Know about the Twentieth Century is Strong
Central Planning and the Man in the Pajamas
- The Theory of the Firm
- Coase's "Theory of the Firm"
The Computer and tbe Market
Dot-Com Disappointment
The Connected Revolution
- The Democratization of Processing Power and Computer Storage
- The Declining Cost of Communication
- The Rise of Ubiquitous Connectivity and Sensors
- The Growing Returns to Scale on Data Analysis
"It turns out that people don't have any problem with central planning in principle - they just don't like BAD central planning."
Chapter 3 - The Zero-Marginal-Cost Company
"Network effects are the strongest economic moat of all." - Bill Gurley
Chapter 4 - Modern Monopolies - Platform Capitalism and the Winner-Take-All Economy
Chapter 5 - Designing a Billion-Dollar Company - How the Core Transaction Explains Tinder's Success
The Core Transaction
- Create
- Connect
- Consume
- Compensate
Start with one transaction only
Chapter 6 - The Visible Hand - The Four Functions of a Platform
- The Core Transaction
- Audience Building
- Matchmaking
- Providing core tools and services
- Creating rules and standards
Chapter 7 - Let the Network Do the Work
Metcalfe's Law - The value of a network is proportional to the square of the number of connected users in a system. - does not take into account the quality of users (e.g. Chatroulette, Friendster & Myspace)
Most Network Effects are Local - network density
Network quality trumps network quantity.
The Network Effect Ladder: A Framework for Growing Quality Networks
- Connection
- Communication
- Curation
- Collaboration
- Community
Chapter 8 - Why Platforms Fail, and How to Avoid It
Three Ways to Subsidise Value
- Monetary Subsidies
- Product Features Subsidies
- User Sequencing
Seven Ways to Solve the Chicken-and-Egg Problem
- Provide Security through a Large, Up-front Investment
- Cooperate with Industry Incumbents
- Act as a Producer
- Tap into an Existing Network
- Attract High-Value or "Celebrity" Users
- Target a User Group to Fill Both Sides
- Provide Single-User Utility