The internet enables lots of great stuff: unparalleled scale, fantastic business models, Google Maps, memes. But technology isn’t inherently good. It’s neutral. The same product used to organize a charity fundraiser can be used to organize an insurrection. This week, strategic bombing and the limitations of techno-optimism.

Bigger, Faster, Stronger

Airplanes entered combat during World War I, mostly in artillery spotting and reconnaissance. Initially, the US Air Force wasn’t its own service branch. It was a wing of the Army called the United States Army Air Corps (USAAC) tasked with supporting ground troops. It remained a part of the Army until September 1947.


Economies of Scale

Booking.com is the largest aggregator of accommodations in the world. At the end of 2020, it offered reservations for nearly 2.4 million properties. This included over 430,000 hotels and 1.9 million vacation rentals, apartments, and alternative accommodations 1. In contrast, Marriott ended 2020 with roughly 5,600 hotels and 943,000 rooms 2. For every room that Marriott has, Booking has two-and-a-half properties. Advantage, Booking.com.

Booking’s global, diverse supply enables it to serve multiple travel needs. Whether you’re looking for a hotel in Tokyo, a vacation rental in Lake Como, or a chalet in Chamonix, it has the supply. …


Unhappy Families

Customers are like Tolstoy’s unhappy families, all different in their own way. To value a consumer business, you need to understand customer lifetime value (CLV), which is driven by acquisition, monetization, and retention.

Because these variables are dynamic and interactive — and there’s no average customer — calculating CLV is difficult, as Michael Mauboussin, Head of Research at Counterpoint Global, writes in a recent report. Mauboussin is the finance equivalent of Daniel Kahneman, who wrote Thinking Fast and Slow. His report illuminates the tradeoffs and complexities of forecasting consumer businesses.

Customer Lifetime Value (CLV)

CLV is composed of customer acquisition cost, monetization, and retention:


Hi 👋 — Companies like Booking.com and Etsy earn a fee for connecting buyers and sellers. This post looks at take rates, pricing strategy, and the tools marketplaces use to increase them. Thanks for reading.

Take Rates 101

Gross merchandise volume (GMV) is the lifeblood of a marketplace. It measures transaction value and is a key metric for operators and investors. For example, Airbnb’s GMV is the number of nights booked times the average price per night. To grow GMV, Airbnb needs some combination of higher volumes (nights booked) and higher prices (average daily rate).

Marketplaces aggregate supply and demand and sell transactions…


Hi 👋 — New technologies enable new business models. Today, most of the world walks around with an internet-connected supercomputer in their pocket. Smartphones have allowed all sorts of new marketplaces to flourish. Airbnb lets hosts sell spare rooms. Turo lets car-owners compete with Hertz. ThreadUp is digitizing thrifting. This post digs into Hipcamp, a marketplace for outdoor accommodations. Happy camping. 🏕

There was a beautiful break. Had she known, she would have packed her surfboard, but the website for Andrew Molera State Park didn’t mention anything about surfing. …


Hi 👋 — At scale, marketplaces are wonderful businesses. But getting them to scale is fiendishly hard. That’s because of the chicken-and-egg problem with supply and demand. This note takes a look at marketplace liquidity. Thanks for reading.

Big is Beautiful

Marketplaces sell transactions. They connect supply and demand, facilitating commerce. For example, Uber connects drivers (supply) and riders (demand), taking a cut of the revenue for playing matchmaker. Similarly, Airbnb connects hosts (supply) with guests (demand), and also takes a cut.

At scale, marketplaces are beautiful businesses. First, they’re asset-light. They don’t need to buy inventory or require heavy capital expenditures. While…


Steve Jobs described innovation as “saying no to a thousand things.” To Jobs, focus meant turning down hundreds of good ideas to concentrate on a few carefully selected options. His ability to say no and subtract bucks the normal human tendency to solve through addition. At an individual level, this tendency blinds us to easy solutions. At a company level, it leads to bad strategy.

Less is More

Marie Kondo aside, people favor addition to subtraction. When asked to make improvements, we typically add things rather than removing them. Instead of decluttering, we buy a new rug. …


Big market caps come with big expectations. To fulfill these, large tech companies are entering new markets in search of growth. Like a group of concentric circles radiating outward, they’re bumping into each other. Podcasting is a recent flashpoint.

A Podcast a Day Doesn’t Keep Spotify Away

With iTunes and the iPod, Apple helped popularize podcasts. It hasn’t innovated much on them since. This created an opening for Spotify to aggressively enter the market. For Spotify, podcasting represents a key component of its growth strategy and a business model salve. …


In February 2014, portions of the London Underground shut down for three days as employees went on strike over plans to close ticket offices and eliminate 1,000 jobs. For commuters, the shutdown caused widespread misery. For economists, it sparked joy.

A Striking Finding

The partial Tube shutdown created a natural experiment, making economists giddy. With certain stations and train lines shuttered, some commuters were forced to find a new way into the office while others weren’t affected.

Economists Shaun Larcom, Ferdinand Rauch and Tim Willems analyzed individual’s travel data on the London Underground from January 19, 2014 to February 15, 2014 to suss…


Hi 👋 — Businesses need to meet customers where they are. Increasingly, that’s online. As Jamie Dimon notes in JP Morgan’s 2020 annual letter, adopting cloud computing and leveraging machine learning are fast becoming table stakes on Wall Street. This note looks at the firm’s annual letter with an eye towards competition from Silicon Valley and fintech. Thanks for reading.

Jamie Dimon is like a Caesar salad. Because they’re delicious, Caesar salads are on my always-order list. Similarly, because he’s a strong operator and has a ringside view of the US economy, Dimon, CEO of JP Morgan Chase, is on…

Kevin LaBuz

Finance at Indeed. Previously finance at Etsy and internet equity research at Deutsche Bank. Find me @kjlabuz.

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