
Own the Demand - colinprince
https://florentcrivello.com/index.php/2018/10/22/own-the-demand/
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shanghaiaway
Being a distributor is no better than being a producer. They have different
strengths and are reliant on each other. Who holds the power in the
relationship is cyclical.

All platforms rise and eventually decline. Amazon has already started going
downwards after it sacrificed quality in its chase for scale by opening up its
platform to third parties and their counterfeits. Similarly, we'll see
ecommerce in China move from Tmall to independently owned stores that allow
for differentiation, higher service quality, and owning the customer
relationship. Just like offline stores are now coming back, for the same
reasons.

~~~
gesman
There is a reason platforms decline.

Biggest one is when platform gets too fat and lazy and then torn apart by
competition (Myspace, Aol).

If competition is too weak (AMZN) or platform is too strong (GOOG) - the
decline is afar.

That said - I think the biggest and quickest riches are made by connecting
supply and demand (platforming) instead of owning either of these.

~~~
shanghaiaway
Amazon is fat and lazy now. They grew by offering the lowest prices on
products you know, with fast shipping. Now, you don't know what you're buying
or that you're getting the best price, and shipping isn't as fast.

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laser
That number thrown out at the end is pretty mind-blowing: Google pays almost a
tenth of their total revenue just to stay as the default search browser on
Safari on iOS and MacOS. And Apple gets nearly 5% of its total revenue from
this one deal.

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TimJYoung
I'm not sure if we've seen this entirely play out yet. We're now seeing
content companies (supply) starting to exert their power over the
internet/media intermediaries (Disney is the recent example), so it may end up
being a case that the intermediaries had a good thing going for a while,
but...

IMO, you either produce something or you don't. Someone may be able to
interject themselves into your transactions with your customers, but,
ultimately, the power lies with the producer (they can just stop producing).

~~~
kamarg
> the power lies with the producer (they can just stop producing).

It's not that easy. This presupposes that there isn't another producer that is
capable of creating a comparable product. There's many studios that can
deliver high quality movies. If Disney stops producing new content, they can
continue to coast on the old content but those other studios will step in and
take a growing amount of Disney's share of the market. As long as the new
studios are willing to make a deal with the intermediaries, those
intermediaries won't be the ultimate loser in this scenario. Disney will be.

Now if all the producers of high quality content decide not to deal with an
intermediary then the story plays out a bit differently. In that scenario
everyone is a loser and we go back to piracy being the best solution for most
consumers.

~~~
shanghaiaway
Content producers trade in IP. There is no substitute for the Lion King. Now,
the challenge is creating such IP consistently.

~~~
badosu
> There is no substitute for the Lion King.

Kimba:
[https://en.m.wikipedia.org/wiki/Kimba_the_White_Lion](https://en.m.wikipedia.org/wiki/Kimba_the_White_Lion)

~~~
shanghaiaway
Yeah, no.

~~~
badosu
Read through "The lion King" controversy chapter

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sytelus
TLDR; The author argues that you want to aggregate the demand side and offload
actual production, inventory and even logistic to someone else. The example is
Kylie Jenner who runs billion dollar cosmetic business through 5 employees and
only handles brand/marketing while offloading everything else to others.

This is similar in advice from various life coaches like Tim Ferris et al. The
problem with this model is that your supplier eventually will take over your
marketing with parallel product and leave you in dust. Margins in business are
like vacuum and people will eventually move in to reduce them.

~~~
ak39
Thank you for this. I was bruising reading the article.

I also agree with your point about vacuums in supply chains closing quickly.

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petra
"owning the demand", "aggregation theory" are all powerful advice, but it
seems that it's mostly for big companies or stars. And maybe for VC based
startups.

But is this relevant for a small scale entrepreneur ?

~~~
carlsborg
I think he says it right there "In short, if somebody successfully inserts
themselves between you and your customer, they can exercise tremendous control
over you, including taking a big chunk of your profits or outright killing
you."

Read "you" as "large incumbent" and "somebody" as the small scale
entrepreneur.

~~~
petra
OK, but how ? how does a small scale entrepreneur with few resources manages
to achieve such difficult feat ?

~~~
Ibethewalrus
You innovate. You deliver a similar solution in a simpler “good enough” way
(rebar). Or solve something cumbersome (stripe), or create new markets
(invision, Netflix)

~~~
petra
Stripe raised $245M. Netflix raised 3.1B. invision too raised significant
funds. and rebar isn't about a demand side business, it's a better supply side
business.

~~~
awad
The ultimate trade-off made between self-funding and raising outside capital
is how much you can invest in growth at an accelerated rate. Unless you have a
pre-existing brand you can tap into (like Kyle with her cosmetics or Clooney
with his Tequila), it's nearly impossible...though some companies have done
it. But, even with outside funding, outsized success is still rather difficult
to achieve, so it's a matter of personal preference what route you go down at
the end of the day.

