1/ Just listened to @sarahtavel episode at @patrick_oshag podcast.
I wanted to build a habit of writing down some big takeaways/interesting insights from the podcasts I am listening to. So here it goes for this episode.
Episode link: investorfieldguide.com/tavel/
I wanted to build a habit of writing down some big takeaways/interesting insights from the podcasts I am listening to. So here it goes for this episode.
Episode link: investorfieldguide.com/tavel/
2/ Tavel discussed how new entrants can pose a threat to the incumbent by increasing the "liquidity" in an industry. Don't think "liquidity" in traditional finance sense, think "increasing the unit of products/services" in a particular market.
3/ Take the food delivery network. initially dominated the market. But Postmates and DoorDash saw an Achilles heel of GRUB. GRUB's network consisted of independent restaurants that already had their delivery fleets. New entrants looked at it and saw a great opportunity...
4/ New entrants increased the "liquidity" significantly by signing up the restaurants that did NOT have delivery fleets of their own. All on a sudden, there was a big market to grab where was not dominant, and everything changed.
5/ Another example mentioned by Tavel was Airbnb vs VRBO, which was founded 10 yrs before Airbnb. VRBO was the incumbent, but instead of thinking the market as "vacation rental house", Airbnb increased liquidity by including even a room within a house or alluring beyond vacation.
6/ One way to think about this "liquidity" is the tinkering with definition of the market itself. I knew regulators do it all the time to argue for their intended outcome.
I now also appreciate how playing with definition can have deeper implication for entrepreneurs as well.
I now also appreciate how playing with definition can have deeper implication for entrepreneurs as well.
7/ Tavel also mentioned "Macro" factors that may have worked against in the food delivery battle. Being a public company, it was leaning more towards focusing on profitability vs private co's focusing on just growth. But growth for growth's sake can be misleading.
8/ It's not growth or just market share leadership that accrues value to shareholders, what seems to matter MUCH more is how much bigger the number 1 player is compared to number 2.
9/ So three big takeaways:
1. Increase liquidity if you want to topple the incumbent
2. Public and private co's can play with different rules, although I think that might change a bit for a while given current crisis
3. The dominance of #1 player vs #2 player
1. Increase liquidity if you want to topple the incumbent
2. Public and private co's can play with different rules, although I think that might change a bit for a while given current crisis
3. The dominance of #1 player vs #2 player
