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Thanks for the suggestion MS, I’ll be sure to check that out as it sounds like New Orleans is a great example of what can happen when a new platform doesn’t work proactively with regulators.

Fidel,

Totally fair point and I think we’re starting to see some of that, while it’s difficult to get data on a lot of those lower tier brands (Motel 6 is private, super 8 is part of a larger hotel conglomerate) I was able to find detail on Extended Stay America. Just a brief look at the latest earnings release shows that they’re seeing year over year decreases in adjusted EBITDA and operating margin which could certainly be signs of this erosion.

https://www.aboutstay.com/static-files/9a1eb92f-5235-4d79-a7e0-7d50a0671083

PC, Thanks for sharing the article.

I completely agree that there is argument to be made that Airbnb has hurt the long term rental market by causing property managers to choose short term rentals over long thus reducing the supply of long term rentals. In fact the building I live in appears to keep several units set aside just for short term rentals, despite specifying in my lease that I am not allowed to rent my apartment in a short term manner. I do wonder if this will be a permanent market adjustment though, or if regulation and general supply and demand will help us find an equilibrium between short and long term rentals, as long term rentals do still offer some benefits to property managers (predictable cash flows over a long period) particularly in markets that aren’t subject to rent control like Boston.

To your second point, I think it’s very interesting to watch how the “ask for forgiveness” wave of tech innovation has played out. To a certain extent I think we even saw this with Amazon, an initial key benefit of theirs was the lack of sales tax which they used to gain scale, now that they have scale they collect sales tax, but I wonder if they could have ever achieved scale without first maneuvering around this rule. It’s also been very interesting to watch the electric scooter battle play out as municipalities that feel burned by Uber and Airbnb have taken a very clear “ask for permission or leave” approach, perhaps even over correcting.

On March 2, 2019, D commented on The Best Camera is the One That’s With You :

Very interesting article.

I’d be curious to see your first chart including shipments of cameras in smart phones, as I wonder if the overall camera market is still growing or has flattened out as we have consolidated to a single photo device. Which then leads me to wonder who is building the cameras in these smartphones, I was under the impression companies like Sony still produced a lot of the smartphone cameras, but are obviously getting squeezed in the value chain now that they aren’t the OEM.

Your article also reminded me of the concept that the rise of smartphone cameras has theoretically proved that Bigfoot/Sasquatch doesn’t exist, as we now have a camera with us nearly 100% of the time but still don’t have any photo proof of Bigfoot (as opposed to the old adage that people saw him but didn’t have a camera with them to prove it). Just an interesting thought.

On March 2, 2019, D commented on Ebay Held at Bay :

JS,

Ebay certainly looks like a loser and almost an afterthought in terms of big tech companies. I agree Ebay over-indexed on trust as a way to keep users from multi-homing but I wonder what other techniques they could have used to maintain dominance as a platform. Would they have been able to make the opposite move of Amazon, launching a storefront that existed alongside their marketplace (Amazon obviously started with the storefront and then moved to a marketplace). Or could they have brought in a loyalty program for buyers to make their cost of switching higher.

Finally, I don’t see any obvious path for Ebay to retake a dominant position in the e-commerce market, curious if you do.

Very interesting article PS.

A couple of questions that come to mind reading it.
It seems like a huge moment in enabling Zillow’s rise was getting full access to MLS data, do you think releasing this data was a short term decision that is now seen as a regret?
I think the discussion around pricing/commissions is very interesting, given Zillow’s growing brand value I wonder if they could get to a place of the consumer “trusting” that Zillow is giving a fair offer and not actively comparing it. If they think this is a possible future it may be an interesting strategic choice to take very small margins (perhaps even lower than real estate agents) on sales in the immediate future with the goal of developing pricing power over time.

I think all the current trends are towards hotels continuing to be pretty asset heavy. But I can imagine a world where they look at the publicly available data on Airbnb (listings, reviews, etc) and use it to adjust their investments (ie maybe deciding to build three bedroom hotel rooms with shared kitchens for families), or looking to leverage digital technology to make the physical use of the space more flexible. The extreme of this adjustment would be investing in things like town houses or small individual apartments to offer a very similar experience to AirBnb but branded as a hotel.

Jillian,
Hard to know for sure before they launch, but given the information I’ve heard about Quibi I see them as two-sided platform for two reasons:
1) Unlike Netflix they won’t own the content forever, they are trying to match producers with users while Quibi is serving the content. So I see them as trying to reduce the search costs between the two sides, as opposed to purchasing an input and repackaging it for a user like Netflix.
2) They’ve shown an interest in working with nearly any production company in the world which will mean many players on the second side of the platform (as opposed to say iTunes which essentially only works with the few major music labels).

To your second question, I think that’s the key product market fit question. I don’t see Quibi realistically dethroning YouTube, the question to me is if user generated short form content and professional short form content will be two different markets that tip seperately, or if Quibi will forever be directly competing with YouTube (a battle I would not personally bet on them winning).

On February 21, 2019, D commented on Can short form video sustain a new platform? Quibi believes it can. :

Hard to know for sure before they launch, but given the information I’ve heard about Quibi I see them as two-sided platform for two reasons:
1) Unlike Netflix they won’t own the content forever, they are trying to match producers with users while Quibi is serving the content. So I see them as trying to reduce the search costs between the two sides, as opposed to purchasing an input and repackaging it for a user like Netflix.
2) They’ve shown an interest in working with nearly any production company in the world which will mean many players on the second side of the platform (as opposed to say iTunes which essentially only works with the few major music labels).

To your second question, I think that’s the key product market fit question. I don’t see Quibi realistically dethroning YouTube, the question to me is if user generated short form content and professional short form content will be two different markets that tip separately, or if Quibi will forever be directly competing with YouTube (a battle I would not personally bet on them winning).

On February 21, 2019, D commented on Plaid :

Jillian,

Thanks for the interesting discussion of Plaid, a platform I was not previously aware of. I think you highlighted a key tension Plaid will face, the concentration of banks being both a plus (easier because it solves the chicken and egg problem), and a minus (harder because the banks can band together and possibly remove Plaid from the market). Specifically I wonder if there is a way for Plaid to greatly reduce the barriers to entry in order to keep new startups from competing with them and the banks from wanting to enter. One strategy that comes to mind, would be seeking out the large banks as investors. If say JP Morgan, Citi, etc all had an investment in Plaid they would be less interested in providing the service themselves as they benefit from the growth either way, and they would also be less likely to integrate with a new startup that they don’t have an equity stake in.

On February 20, 2019, D commented on Android, Not Just an Operating System :

NR, a very interesting take on the the innovation powerhouse that Android has become. It is clear that Android has a massive market that still has room to grow. The interesting question to me is their value capture strategy, it obviously relies very highly on cross monetization through google’s own applications like search, gmail, and maps (and to a much lesser extend the revenue share of Google Play purchases). While these apps come pre-loaded on most Android phones given the open nature of the platform there is nothing stopping users from choosing to not use these apps and replace them with competitors. Therefore while Android is indeed a very powerful and innovative platform its current ability to capture value rests on Google’s ability to continue its market leadership through search, gmail, maps, etc. While I would never bet against Google’s abilities in any of these three arenas I find myself wondering if anything new they are investing in could lead to the same level of value capture should the risk I have laid out come to fruition or what other strategies Google pursue to diversify the risk of Android from its other business lines.

Very interesting article Hanif, it’s great to see someone with an understanding of the local context working to solve the under-banking problem in Indonesia given it’s particularly large population. As I read the article one thought crossed my mind, is the platform sticky? In a branchless banking world multi-homing costs are not particularly high for users to move their money from one bank to another if they choose. I worry that a large player could decide they want to enter the Indonesia market (possibly because they see the opportunity for profit, or possibly as a way to introduce other services they offer like Tencent of Alibaba) and could possibly capture the network effects BTPN is going after by competing on price (charging no fees, or offering a higher interest rate on deposits). I think it is critical that BTPN create some local multi-homing costs/barriers to entry to pre-emptively keep the global fintech players away should this develop into a profitable segment.

Very interesting point Maren, it’s a huge investment without actually verifying the required user behaviour. One more risk to add for the list. I wonder if the platform will be able to make the pivot you suggest may be necessary, depending on how specialized they develop the content for a small screen it may not be possible.