Alex Moazed > Quotes

“We think of and talk about the Industrial Revolution as a singular event, but in reality, it spanned decades. It wasn’t really a revolution but a gradual evolution with revolutionary implications.”
― Alex Moazed, Modern Monopolies: What It Takes to Dominate the 21st Century Economy

“Currently, Bitcoin is by far the largest blockchain network. However, many others (often collectively referred to altcoins) make small alterations to the Bitcoin protocol to adapt it for other uses. But as the nature of the blockchain suggests, a larger blockchain network is a more useful and more secure one. As a result, at present, Bitcoin is effectively the only game in town. However, there are signs that this could change in the near future.”
― Alex Moazed, Modern Monopolies: What It Takes to Dominate the 21st Century Economy

“Hayek argued that centralized coordination of large-scale economic activity wasn’t practical. What was needed instead was a mechanism for decentralization that could effectively aggregate and react to all of the local knowledge that each individual in the economy possessed.”
― Alex Moazed, Modern Monopolies: What It Takes to Dominate the 21st Century Economy

“Many platform businesses are effectively a call option on regulation: if the business can survive its regulatory and legal challenges and capture its market, it has enormous economic upside, both for investors as well as its users. However, if the platform can’t overcome the legal status quo, it can very quickly be driven out of business.”
― Alex Moazed, Modern Monopolies: What It Takes to Dominate the 21st Century Economy

“Everyone’s trained to think that you need to build software to start a tech company. However, in many cases, this is no longer true. In fact, it’s possible to launch platform startups with zero custom software.”
― Alex Moazed, Modern Monopolies: What It Takes to Dominate the 21st Century Economy

“ultimately, the goal should be to get both consumers and producers to have a high degree of trust in the platform”
― Alex Moazed, Modern Monopolies

“Companies like Pets.com made the mistake of choosing a linear business model in the age of the platform. What is a linear business model? It’s the model that has dominated in various forms since the Industrial Revolution, when new technologies like steam power and railways gave rise to the large, vertically integrated organization.”
― Alex Moazed, Modern Monopolies: What It Takes to Dominate the 21st Century Economy

“Because of rising coordination costs, once an organization reaches a certain size and continues to grow, it starts to experience diseconomies of scale, where information and transactions costs rise rather than decline when the business produces more.”
― Alex Moazed, Modern Monopolies: What It Takes to Dominate the 21st Century Economy

“What will provide defensibility?” The answer: “Networks of users, transactions, or data”
― Alex Moazed, Modern Monopolies

“Handy had to figure out how it could grow both supply and demand at the same time in order to reduce wait times. Part of overcoming this difficulty was picking the right markets. The company was meticulous about choosing which cities it would enter first.”
― Alex Moazed, Modern Monopolies: What It Takes to Dominate the 21st Century Economy

“Since most software industries have relatively low barriers to entry—especially today, when startup costs are lower than ever—it’s practically guaranteed that a competitor will come along and offer customers similar software that’s either better or cheaper.”
― Alex Moazed, Modern Monopolies: What It Takes to Dominate the 21st Century Economy

“Suddenly, there was a big shift in where value was made in our economy. Businesses were no longer the sole source of value creation. Consumers were creating value and sharing it with each other. The quintessential example of this change was Wikipedia.”
― Alex Moazed, Modern Monopolies: What It Takes to Dominate the 21st Century Economy

“Create. Connect. Consume. Compensate. These are the four steps that make up the core transaction. If a platform is thought of as a transaction factory, these four steps are its assembly line.”
― Alex Moazed, Modern Monopolies: What It Takes to Dominate the 21st Century Economy

“replace individual trust with trust in the platform is an important part of removing friction from the core transaction”
― Alex Moazed, Modern Monopolies

“This path-dependent nature of networks makes platform design especially crucial early on. Who uses a platform at the start can have a big effect on its growth trajectory. You have the most leverage to shape your community and its culture when your network is still forming.”
― Alex Moazed, Modern Monopolies: What It Takes to Dominate the 21st Century Economy

“the cast of characters will change as technology evolves. But platforms are here to stay. Why? Because platform business models enable companies to expand at a pace unprecedented in human history. When a linear business gains a new customer, it adds only one new relationship—one buyer of products or services. When a platform adds a new user, that person doesn’t add just a single relationship but rather a potential relationship with all of the platform’s users. In other words, platforms grow exponentially rather than linearly.”
― Alex Moazed, Modern Monopolies: What It Takes to Dominate the 21st Century Economy

“Exchange platforms, such as Uber and Alibaba, need to focus on building liquid marketplaces that have sufficient overlap of supply and demand. Maker platforms, such as Android and YouTube, are more focused on organically building “stars” who, because of their high matching intention, can act as powerful nodes in these networks.”
― Alex Moazed, Modern Monopolies: What It Takes to Dominate the 21st Century Economy

“Many early-stage platform startups think of themselves as software companies. This is a mistake. Software companies are more likely to focus strictly on the features they’re creating and less on the community that’s using those features. The thinking is often that if you create a bunch of killer features, users will materialize, and growth and success will follow. If you just tweak this feature and move that button, suddenly you’ll get growth. This view isn’t wrong, per se. Optimization is important for any software business. But for a platform, even one built with software, the ultimate killer feature is its network value. In fact, the more successful a platform is, the less its feature set matters. As your platform grows, you give up a lot of control in exchange for better economics and more value.”
― Alex Moazed, Modern Monopolies: What It Takes to Dominate the 21st Century Economy

“Put very simply, a network effect is present when the behavior of one user has a direct impact on the value that other users will get out of the same service. Network effects make a platform more useful and more valuable as more people use it.”
― Alex Moazed, Modern Monopolies: What It Takes to Dominate the 21st Century Economy

“Companies like Pets.com made the mistake of choosing a linear business model in the age of the platform.”
― Alex Moazed, Modern Monopolies: What It Takes to Dominate the 21st Century Economy

“Nokia had missed the transformative convergence of software and hardware. It was still acting like a product company. But now the smartphone industry wasn’t really about the product; it was about the platform. “We’re not even fighting with the right weapons,” Elop said. “We are still too often trying to approach each price range on a device-to-device basis. The battle of devices has now become a war of ecosystems [emphasis added].”
― Alex Moazed, Modern Monopolies: What It Takes to Dominate the 21st Century Economy

“this is a gold rush.. you can either mine for gold like uber or airbnb, or your can sell the pots, the pans and the levi jeans”
― Alex Moazed, Modern Monopolies

“As the mobile Internet exploded in the late 2000s, four key changes flipped the world of business strategy on its head: the democratization of processing power, the declining cost of communication, the rise of ubiquitous connectivity and sensors, and growing returns to scale on data analysis. Together, these four changes have created a Connected Revolution, an economic and social transformation wherein the dynamics that drove the organizations of the twentieth century no longer apply.”
― Alex Moazed, Modern Monopolies: What It Takes to Dominate the 21st Century Economy

“Metromile, which offers per-mile insurance. The company gives drivers a device that plugs into their cars to track how far they drive. The more they drive, the more they pay. Even better, Metromile can track the driving and match up trips with Uber rides, so the insurance company can see which of miles are personal miles and which are commercial. Metromile charges users only for the personal miles, since Uber covers the car when drivers are with or en route to passengers. “The existing model for insurance hasn’t been able to adapt [to Uber],” Metromile CEO Dan Preston said.3 “We have a technology that drives the insurance product.” More mainstream insurance companies, such as Geico and Progressive, have followed Metromile’s lead by offering ride-share insurance that caters to Uber and Lyft drivers.”
― Alex Moazed, Modern Monopolies: What It Takes to Dominate the 21st Century Economy

“As it turns out, these decentralized networks don’t form and grow all by themselves. It usually takes an organization acting as the primary node in that network to grow and coordinate all of that activity on a large scale. These platform businesses don’t operate the way traditional organizations did. Rather than investing in internal resources—such as employees, factories, or warehouses—platforms create value by coordinating these large external networks of consumers and producers.”
― Alex Moazed, Modern Monopolies: What It Takes to Dominate the 21st Century Economy

“potential new users are driven by their attraction to (or distaste for) your existing user base. once a platform has attracted a critical mass of a certain type of users, more users of the same type will favour it.”
― Alex Moazed, Modern Monopolies

“for platforms, building liquidity is a do-or-die proposition. This is especially true in a platform’s early stages, when the network hasn’t yet achieved a baseline level of liquidity and the positive feedback loop of network effects hasn’t yet kicked in.”
― Alex Moazed, Modern Monopolies: What It Takes to Dominate the 21st Century Economy

“At the highest level of network effects, a platform encourages its users to go beyond self-interest and start taking ownership of the community. With both curation and collaboration, a platform encourages users to create additional value for each other by getting them to act selfishly. Curating or working collaboratively improves the platform for me.”
― Alex Moazed, Modern Monopolies: What It Takes to Dominate the 21st Century Economy

“Initially, however, for most users the cost of joining a platform exceeds the value they can get out of it. In fact, the value of joining the network is often negative early on—the cost to users of signing up and entering information is more than the value they receive for joining and being a part of the network.”
― Alex Moazed, Modern Monopolies: What It Takes to Dominate the 21st Century Economy

“The aggregator and creator of business value is no longer a company’s supply chain or value chain but rather a network’s ecosystem. Value has moved from creating products and services to facilitating connections between external producers and consumers. The firm has collapsed as a center of production and instead has become the center of exchange. The areas where businesses could create and add economic value have shifted away from production and toward the curation and management of networks. That’s where platform businesses come in.”
― Alex Moazed, Modern Monopolies: What It Takes to Dominate the 21st Century Economy