- Didn't find this to be one of Packy's best pieces - crux is that it can become a much bigger biz than Google/FB as the "Apex aggregator".
- If that happens, and I can see it happening, I think I would feel a mixture of relief and disappointment. Relief that the oncoming upheaval due to AI would be slowed because the main AI company is focussing on a business model that improves incrementally on the internet business models by making it more convenient to get stuff done in the digital world. But disappointment because the things that could be transformative (curing diseases etc.) would likely take a back seat.
- "The team wasn't expecting much from ChatGPT" - crazy.
- "I think it can be bigger than the app store (which paid devs $60b last year).
- "The Apex Agreggator"
- "ChatGPT is an attention grabber" - this seems like a weak argument as a comparison to FB/social.
- "I’d imagine that when people have something very specific in mind, they might still go to the legacy websites, but for most situations, the situations where we just have a rough idea of what we want, ChatGPT will work best" - I find this thinking so foreign personally. For me, the act of search and discovery helps me to figure out what I actually want (vs saying "Book a table at a nice restaurant"), but maybe I'm an outlier.
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- Characteristics:
- Direct Relationship with Users
- Zero Marginal Costs For Serving Users
- Demand-driven Multi-sided Networks with Decreasing Acquisition Costs
- Levels
- 1. Netflix - acquires content (supply) to own.
- 2. Uber - doesn't own supply but pays for it.
- 3. Google - don't own supply, incur no acquisition costs.
- Super aggregators: three sides — users, suppliers, and advertisers — and have zero marginal costs on all of them. Only facebook and google so far.
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- "The value chain for any given consumer market is divided into three parts: suppliers, distributors, and consumers/users."
- Ways to make outsize profits
- Build horizontal monopoly in one of the parts, or
- Integrate two of the parts to create a competitive advantage
- "There have always been far more users/consumers than suppliers", so it's more common to "integrate backwards" into supply.
- ^But the internet turned this on its head. Content is free, transaction costs are zero.
- "No longer do distributors compete based upon exclusive supplier relationships, with consumers/users an afterthought. Instead, suppliers can be commoditized leaving consumers/users as a first order priority."
- "the most important factor determining success is the user experience: the best distributors/aggregators/market-makers win by providing the best experience"
- "earns them the most consumers/users, which attracts the most suppliers, which enhances the user experience in a virtuous cycle" - this describes the Atlas flywheel almost to a tee.
- "Previous incumbents, such as newspapers, book publishers, networks, taxi companies, and hoteliers, all of whom integrated backwards, lose value in favor of aggregators who aggregate modularized suppliers — which they often don’t pay for — to consumers/users with whom they have an exclusive relationship at scale"
- "Content has always been monetized by proxy" - worth diving deeper on re: monetization.
- Ladder of internet-based models: 1. Google - modularized content providers. 2. Leveraged UGC and owned the content, 3. Real-world companies - Uber & Airbnb. Commoditized trust. "vacant rooms and taxis have not been digitized, but they have been disrupted"
- "They are all capable of serving every consumer/user on earth"
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