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…


When Jeff Bezos walks into a bar, the average customer becomes a billionaire. Unfortunately, that fact won’t pay for their next round. Extreme outcomes like Bezos’ net worth are a common characteristic of power law distributions. In a fat-tailed world, averages can mislead.

Watch Your Head, Part 1

Many things in the natural world follow a normal distribution: heights, weights and blood pressure. In a normal distribution, or bell curve, most measures fall around the mean. Move further away from the average in either direction, and occurrences become less likely. For example, the average height of an adult male in the United States is 5…


Forrest Gump said it best: shit happens. Always has, always will.

On March 23, the Ever Given, a container ship the size of the Empire State Building, ran aground in the Suez Canal. The initial take is that strong winds and poor visibility caused the snafu. While a boon for meme creators and amateur web developers, the incident is no laughing matter.

The Suez Canal connects the Mediterranean and Red Sea, shaving ten days off the trip between Asia and Europe. It’s a shortcut for manufactured goods from Asia and oil from the Middle East to Europe. …


The first company I worked for used Lotus Notes, an email client developed by Lotus Software in 1989 and seemingly not refreshed since. It also used a custom-built CRM made during the Reagan Administration and held together with duct tape and bubble gum. If you’ve ever worked for a large company — or used Lotus Notes — then you’ve probably familiar with tech debt. It’s the notion that past technical decisions weigh down business performance by dampening productivity, limiting capabilities and increasing employee frustration. Fixing tech debt requires time, money and managerial fortitude. Many companies prefer bandaids to surgery.

As…


Great technology is invisible.” — Steve Jobs

Software became invisible in 2020. As Covid-19 forced work and social life online, software handled more conversations, more work and more transactions. The heavy lifting happened behind the scenes. That text from DoorDash about your dim sum delivery was powered by Twilio. That coffee you ordered online from a small roaster upstate was powered by Shopify.

Once the domain of enterprises, software is everywhere today. As the economy digitizes, it’s permeating industries like construction (Procore) and verticals like auto repair (Shopmonkey) and barbershops (Squire). Zapier, a no-code automation tool, is a prime example of software’s disappearing act. …


Side dishes are the best part of Thanksgiving. Candied yams. Mashed potatoes. Stuffing. Yum. On Thanksgiving 2020, 88,000 Peloton subscribers had a side of cycling with their turkey. The company’s Turkey Burn workouts would have overflowed MetLife Stadium’s 82,500 seats. Peloton illustrates how business models, constraints, and opportunities are changing as economic activity shifts online.

Keeping Emma Busy

The internet enables scale that’s impossible to match offline. For example, Peloton has 36 fitness instructors. In the fourth quarter of 2020, it logged 98 million workouts. On average, each instructor led 30,000 athletes per day, enough to sell out Madison Square Garden and then…

Kevin LaBuz

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

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