Patrick McKenzie Profile picture
Aug 8, 2019 3 tweets 1 min read Read on X
“Isn’t the market for X saturated?”

After literally years of being told that by technologists about software, books, etc etc I can’t think of almost any market which has ever been saturated in the way that people claim every market is saturated.

Freaking *Starbucks* is not.
Starbucks of the industry-leading commercial real estate team which will give serious consideration to putting two Starbucks on the same street corner to avoid losing potential Starbucks customers who were at that street corner wanting Starbucks but not enough to turn for it!
Tagging the above tweet as being in no way sarcastic; they factually are one of the best real estate operations in the US (Walgreens and McDonalds also very good at this even within their categories) and they absolutely will take two corners.

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More from @patio11

Apr 3
I don’t have anything novel to contribute on the substance of but have to again comment, pace Situational Awareness that I think kicked this trend off, that single-essay microdomains with a bit of design, a bit of JS, and perhaps a downloadable PDF are…ai-2027.com
… a really interesting form factor for policy arguments (or other ideas) designed to spread.
Back in the day, “I paid $15 to FedEx to put this letter in your hands” was one powerful way to sort oneself above the noise at a decisionmaker’s physical inbox, and “I paid $8.95 for a domain name” has a similar function to elevate things which are morally similar to blog posts.
Read 5 tweets
Mar 27
This week on Complex Systems, a continued discussion of credit card rewards, interchange, and what I believe is a persistent misconception about how society should want justice done via payments systems.

It ends with the following, which the team took the liberty of putting into a short clip. (Sound on if you like hearing my voice, but video is subtitled.)
Last week the Atlantic published an opinion piece which argues that the poor are subsidizing the rich's receipt of credit card rewards. This view has wide currency among certain advocates and among opinion writers.

It is not true.
Credit card rewards are actually funded by interchange, a cost which is ultimately paid by card-accepting businesses for a combination of services they get from the payments industry.

Rewards have a few equilibria globally; the U.S. is in a high rewards, high interchange one.
Read 10 tweets
Mar 20
An argument I have had with some credit card enthusiasts for a very long time, paraphrased.

Enthusiasts: I’m robbing the bank blind!
Me: Doubtful? They are probably pretty happy to have a portfolio of you.
E: Oh by carefully layering promotions and making a spreadsheet and…
Me: So checking my understanding: you spend a lot of money on credit cards.
E: Yes, that’s the whole point.
Me: And in a nation which makes it illegal to underwrite using an IQ test, you have self-constructed an IQ test.
E: Yes and I pass it obviously.
Me: Right. Tracking.
Me: You sound like a very desirable bank customer.
E: Oh no I’m not! I take them so hard.
Me: Your income and net worth are likely to be quite higher in ten years right. You predict that too?
E: Oh yeah.
Me: Yeah you’re going to continue consuming lots of financial services.
Read 7 tweets
Mar 20
The Atlantic has an interesting piece on credit card processing. The thesis is that interchange fees redistribute money from poor to rich.

I do not subscribe to this thesis.

For a quick recap on how credit cards make money, see Bits about Money's issue on the topic.

bitsaboutmoney.com/archive/how-cr…
There is a general feeling in some quarters that the payments industry functions as a tax on everyone, and that the incidence of this tax must be highest on the poor, because they're least likely to have a rewards card.
Read 36 tweets
Mar 18
Last up at #microconf, Marcos Rivera from Pricing I/O on pricing.

"How to avoid stupid mistakes in SaaS pricing"

(I am likely to have some thoughts.)
As always, quotes are Marcos (lightly paraphrased; real time is hard), anything attributed to Marcos is a heavy paraphrase, anything unattributed is me.
Marcos was previously Head of Pricing for Vista Equity Partners (hoohah; noted PE firm in software space).

Podcast host of Street Pricing, too.
Read 33 tweets
Mar 10
This is a useful enough specific observation that I'm promoting the general observation to text:

Organizations don't make decisions. People at organizations make decisions. Very often, there is one lynchpin person who must hypercommit to an org doing something for that to be.
From this follows any number of corollaries, including:

1) If you desire change in an org, it is really useful to understand who, specifically, is the lynchpin for the change you want to see.
2) You might be offered the choice to be that person at some point in your career.

This will rarely follow someone whose job title is Quest Giver coming to you with a choice of two pills, one of which is failure and one of which is success, with clearly listed of side effects.
Read 5 tweets

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