YouSaid · the spoken record

Alex Moazed

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66
first
2017-02-21
most recent
2017-02-21
sittings or episodes
1
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podcast

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  1. “Is by bringing pricing transparency. And then pitting all the third party suppliers against one another to make sure they're giving you the most optimal price. Because what happens when you have a lack of pricing transparency is you then have arbitrary pricing, which again is just increasing the cost of whatever that service or good is to the end customer. So you're ripping a lot of that out by centralizing it and saying that the platform is the central arbiter and understands the market better than anyone else. So they can do the best job in matching supply and demand better than any one individual on either side of that ecosystem can. When you look at more commoditized products or services like Uber, which we've talked about, you start to see the opportunity for that platform to essentially reduce transaction costs even more by staying”

    2017-02-21 · Invest Like the Best · Alex Moazed – Building Modern Monopolies - [Invest Like the Best, EP.25] · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “Probably a lot of the same channels that the big players do, and that's one of the advantages the big players say, okay, I'm gonna buy you, and now I can reduce all the similar overhead SG&A costs. I can just roll that into all these existing cost centers of mine, and I have a more efficient business, right? So the platform is able to reduce that by saying you just focus on having equipment ready and having it be of good quality and ready to be serviced, having good customer service. And I'm going to focus on getting you the customer, figuring out what their needs are, making sure it's an optimal price. So a lot of these industries, there's a huge transaction cost inherent in a lack of pricing transparency. So one of the inherent ways that transaction costs are reduced by a platform, by a marketplace model.”

    2017-02-21 · Invest Like the Best · Alex Moazed – Building Modern Monopolies - [Invest Like the Best, EP.25] · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “Connecting those two things. And where you see that possible are in more fragmented industries, where if you were to just think about it and say, okay, if I have an industry where it's more fragmented, that probably means that the cost is duplicated a lot more across all these different providers who are both, say, providing a service and then handling all the marketing, the SG&A cost to actually have that service consumed. If we just take the heavy equipment rental market for an example, right? You have a lot of small players, mid-sized players, and then you have a few big players in markets where you see the biggest players having maybe half of the revenue in an industry, that means you have thousands of other companies that are small that all have to figure out how to go get customers.”

    2017-02-21 · Invest Like the Best · Alex Moazed – Building Modern Monopolies - [Invest Like the Best, EP.25] · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “All roll into this bucket of overhead. Now, if you were to say, how do I create a more efficient model where I can reduce those search and transaction costs? All I want to do, I want to separate the two roles in fulfilling the demand, right? I want a business to focus on just finding me someone or a product or a service who's going to give me what I want, and then I want the person or good or service that I'm receiving to just focus on giving me that good or giving me that service. And I don't want that to be the same company, right? I want to separate these things that the platform as facilitating the exchange can focus on just creating the best exchange possible. And there is the least bloat and least overhead involved in actually connecting.”

    2017-02-21 · Invest Like the Best · Alex Moazed – Building Modern Monopolies - [Invest Like the Best, EP.25] · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “If you were to take the traditional business model canvas of a linear business and look at all the costs that go into sourcing the labor, coordinating the labor, having the upkeep for either the product or the car, how efficiently you're then able to fulfill the demand and what kind of opportunity cost you may have by not having inventory readily available, or maybe you see this a lot with the heavy equipment rental industry where United rentals, the biggest player, will actually go and lease equipment from other smaller rental companies to fulfill the demand that they're getting, but they can't fulfill. And all the costs that go along with having those assets on your balance sheet, them depreciating and so on and so forth.”

    2017-02-21 · Invest Like the Best · Alex Moazed – Building Modern Monopolies - [Invest Like the Best, EP.25] · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “Yeah, so when we think about transaction costs, they often come hand in hand with the concept of that core transaction, right? And when you look at in the taxonomy of platforms, there are multiple different types of platform business models, particularly in, say, service and product marketplaces, which is how we would define where an Uber fits on a service marketplace because the driver is essentially exchanging a service or in an Amazon you're exchanging a product. In those kinds of businesses, we call them exchange platforms. The value prop of reducing search and transaction costs is probably the strongest point of value that at a macro level, the platform is able to bring to that industry. And what that means is”

    2017-02-21 · Invest Like the Best · Alex Moazed – Building Modern Monopolies - [Invest Like the Best, EP.25] · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “Say PNG and many of their business lines and product lines because they can and they can create some additional margin and sell some quality products at a lower price point.”

    2017-02-21 · Invest Like the Best · Alex Moazed – Building Modern Monopolies - [Invest Like the Best, EP.25] · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “Years and actually in their most recent quarterly earnings is why they missed on the, some of the analysts will say that's why they missed on the revenue but hit on the margin was because the revenue of selling a product through the Amazon marketplace, they don't recognize the revenue, but they get their commission in 8 to 20 percent commission off of the goods that are sold by third-party sellers in the Amazon marketplace. And that's where they make the predominantly large portion of their profit from their e-commerce unit is from the third party sellers who are also paying rent to store the products in Amazon's warehouses if they want to be in the Amazon Prime program. So yeah, you see a lot of this kind of blending of linear and platform. You also see Amazon creating a lot of their own white label products to undercut”

    2017-02-21 · Invest Like the Best · Alex Moazed – Building Modern Monopolies - [Invest Like the Best, EP.25] · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “Apple's a great example. I would prefer to use the app stores as their platform example. The only caveat with the music is just because the labels and the rights in music give you somewhat of a consolidated supply ecosystem for where you get the rights from. But yes, at a high level, the idea you're spot on. And you see a lot of these, even Amazon, started as just a book reseller, right? So another way to think about linear versus platform is if you think about the balance sheet of these businesses, those assets, the things that they're selling are going onto their balance sheet, right? If you are a grocery store or an Amazon book reseller in the mid to late 90s, you're taking that inventory and it's going onto your balance sheet, right? For the marketplace model that Amazon has been growing immensely over the past 10 years.”

    2017-02-21 · Invest Like the Best · Alex Moazed – Building Modern Monopolies - [Invest Like the Best, EP.25] · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “With a lot of fragmentation where you can create a tremendous amount of value by reducing search and transaction costs. So if you think about what's an industry where the existing players are creating value and they're also handling the distribution of their product or service and you think about it in a macro way to say is that actually being distributed in an efficient manner? And if I were to bring a new model, the platform model, into that industry that could more effectively coordinate that exchange of supply and consumption, essentially, could that business create a lot of value? If you're checking off yeses to a lot of that, then those are some of the things that these businesses just as a core value prop for the business model will be able to bring to these new industries.”

    2017-02-21 · Invest Like the Best · Alex Moazed – Building Modern Monopolies - [Invest Like the Best, EP.25] · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “In terms of creating new markets and then reshuffling the value prop in some traditional industries, it's quite impressive and you're certainly seeing that on the stock market and in other plays. Now, what we see for, say, the next 20 years is these businesses have a new operating model and they are extremely profitable and they need to grow fast in the future. And some of their markets like Google search is actually starting to decline in some ways, still generating a lot of cash, but they need to look for other ways to for growth. And that's where you start to see a lot of those modern monopolies that Famga market moving into other traditional industries and seeking to do the same thing. Bring their platform model into an industry.”

    2017-02-21 · Invest Like the Best · Alex Moazed – Building Modern Monopolies - [Invest Like the Best, EP.25] · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “In terms of just net market cap and valuation on the U.S. markets, those are a sampling. But in private companies, you have Uber and Airbnb and Snapchat, which is just about to go public, obviously, that will then quickly be added to those ranks. So it takes at least 10 years for these businesses to really hit a point of strong critical mass or the book I co-authored called Modern Monopolies, essentially to become that modern monopoly for these network effects and winner-take-all dynamics, which we'll discuss, the time horizon is a lot longer than, say, a traditional linear business, like some of these books will give it a time line of maybe five, seven, eight years for those to hit that billion dollar mark. We're still in the very early stages, but when you look at”

    2017-02-21 · Invest Like the Best · Alex Moazed – Building Modern Monopolies - [Invest Like the Best, EP.25] · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “Yeah, so the quick and dirty definition of what makes you a platform company is you're taking a large fragmented network of individuals and or companies that create value and your focus is on facilitating that exchange of value. So if we think about FAMGA, which is stands for Facebook, Amazon, Microsoft, Google, and Apple. And I think at some point they own the top four or five slots.”

    2017-02-21 · Invest Like the Best · Alex Moazed – Building Modern Monopolies - [Invest Like the Best, EP.25] · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “Multibillion dollar company that creates an immense amount of value. And then you saw a lot of consolidation and a lot of things happen like that to be more vertically integrated, say in the latter half of the 20th century. What we see now, though, in the late 90s and 21st century is the dawn of the platform business model, essentially having a resurgence. It's somewhat always been around, but in niche markets and again through more brick and mortar means, but now with the confluence of technology, the internet, and then smartphones and so on and so forth, data, unlike anything we've seen before, and people's user behaviors actually molding to these new interaction models, now you see that platform model really coming onto the scene and in a position. Dominance.”

    2017-02-21 · Invest Like the Best · Alex Moazed – Building Modern Monopolies - [Invest Like the Best, EP.25] · IDENTIFIED FROM THE TRANSCRIPT · source

  15. “You see a way to incrementally improve upon that linear business model, right? So value and information flow in a very linear way. I have suppliers and then I bundle that up and I create something and I package it and then I distribute it and I sell it. And so I have really one consumer, one customer, and I'm creating the value chain and controlling a lot of it internally. Over the past probably 50 years, particularly in the 80s with Malcolm Porter and the idea of vertically integrated value chains and economies of scale, that idea was taken to the next level, which was, okay, if you go a step farther and now own your supplier and your supplier suppliers, you could shave a couple points of margin and add it to your bottom line. And since you're a huge”

    2017-02-21 · Invest Like the Best · Alex Moazed – Building Modern Monopolies - [Invest Like the Best, EP.25] · IDENTIFIED FROM THE TRANSCRIPT · source

  16. “Sure, so great to be here, Patrick. Thanks for having me. If we were to start at 100,000 feet up, You look back thousands of years ago and think about a bazaar in ancient Rome connecting buyers and sellers or now say the twentieth century with shopping malls connecting buyers and sellers. It's the same underpinnings of the platform model, but using brick and mortar as opposed to tech and digital and data. Now we look at, say, the 17, 1800s Industrial Revolution, companies being created to leverage machinery and industrial mechanics to create products, create value, transportation systems, building cars, you know, and a whole slew of other products and services that are now enabled. Those businesses for really the past two or three hundred years have been getting bigger and bigger and bigger. Every 20, 30, 40 years,”

    2017-02-21 · Invest Like the Best · Alex Moazed – Building Modern Monopolies - [Invest Like the Best, EP.25] · IDENTIFIED FROM THE TRANSCRIPT · source