Thread by @Akshay001

Aggregation Theory 👉🏼 @stratechery ⭐️

3 parts to Value Chain: Suppliers, Distributors, Consumers

👆🏼Goal = Monopolize 1, OR combine 2 (& offer vertical solution)

Eg of latter: printed newspapers, where distribution+suppliers integrated (content creation) -> advertising 💰

1/n

Book Publishing: distribution capabilities integrated w/ control of authors

Video: broadcast availability integrated w/ purchasing content

Hotels: brand trust integrated w/ vacant rooms

👆🏼- distributors integrated backwards into supply > OWNING supplier relationship is 🏅

2/n

But internet companies change the game,

- distribution is free (limited supplier integration advantage)
- transaction costs zero (hence distributor can integrate forward 2C)

Hence, we get a fundamental change in company building:

3/n

“no longer do distributors compete based upon exclusive supplier relationships, with consumers an afterthought. Instead, suppliers can be commoditized leaving consumers as a FIRST ORDER PRIORITY”

(like we play #StudentFirst 👑@leverageedu)

Hence, ...

4/n

Hence, most important focus areas are:

- NPS
- UX
- Zero CAC / Negative CAC loops
- User ❤️ measured by Referral %

In the new world:
Aggregators > Backward Integrators

🌟 Modularise-Your-Supply
🌟 Digitise the Differentiator/s
🌟 Have your demand attract supply

5/5 🙏🏻

Link to the inspired piece: stratechery.com/2015/aggregati…

Thanks @benthompson, you are right when you say “every industry will belatedly discover it has a critical function that can be digitized and commodified”

Aggregation theory is truly the means.

https://twitter.com/akshay001/status/1267581503770370048