📓 Own The Demand
We live in the Platform Era. Aggregators rule the day—from Amazon and Google to TikTok and Uber.
It’s the marketplaces that make the money.
In our current era, attention and currency are synonymous so “marketplace” doesn’t have to mean commerce, a la Amazon. TikTok is a marketplace of content. Google is a marketplace of information. Facebook is a marketplace of connections.
Of course, when framed as marketplaces it makes everything feel more like an extension of history. The market has been the center of activity for towns, cities, regions, populations for a long time now. It’s been the maker of fortunes and the spreader of news. The market has been the gathering place. The difference now being that it’s been digitized and the major players have gone meta—owning the space the market happens within instead of just participating within it.
This rabbbit hole line of reasoning is brought to you by: this post called Own The Demand.
It argues (rather convincingly, even if it is just a reflection of the current Silicon Valley vault of 10x’ing playbook) that it is both better and safer to own the demand instead of the supply. The same level of pricing/market power with fewer production concerns.
For example:
There’s this famous comment that “Uber owns no cars; Airbnb no real estate; Facebook no content; and Ebay or Alibaba no inventory.” If you can get away with being 1% as capital-intensive as your competitors while extracting greater profits, why wouldn’t you do it?
In logistics, it’s all about the “last mile”. That’s the hardest, most expensive part of any delivery chain. It’s also what connects the supplier to the end consumer. Controlling that “last mile” is owning the demand.
If you want a shot at a mega-business, control the last mile for the sandbox you’re playing in.
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As an aside, Uber’s mission statement used to be way better:
Uber is a two-sided marketplace, yet its mission statement used to be “transportation as reliable as running water, everywhere and for everyone” (is it now “We ignite opportunity by setting the world in motion”).
The newer one feels grandiose and aspirational, but what does it mean? What vision does it instill?
The original is both clear and a useful decision-making check: “does this make transportation as reliable as running water?”
(Maybe the NYC Uber air taxi idea failed that question filter so the mission had to become more abstract to allow it. Optionality strikes again?)