For a given consumer market, the value chain can be divided into three parts: suppliers, distributors, and consumers/users. To make outsize profits in these markets, you needed to either gain a horizontal monopoly in one of the three parts or integrate two of the parts such that you received a competitive advantage in delivering a vertical solution. Before the internet, the only way was to control distribution.
Before the internet, the only way was to control distribution. This can be the distributing of newspapers, video, taxis, hotels, or consumer products. The only way a product like Tide worked for Proctor & Gamble was by controlling the shelf space in the large grocery chains and advertising on TV and print to drive mass traffic to the grocery store. However, the internet and the rise of digital goods has changed all of this.
I had been planning on writing about Aggregation Theory for some time and then this morning, Ben Thompson from the incredible blog Stratechery posted his 2017 version of Aggregation Theory updated from his original post in 2015. While Stratechery requires a paid subscription to access, he does send out one post a week without a paywall. Luckily, this is one of those articles, and I can’t recommend it enough. It goes great with his original article on Aggregation Theory (both below) and is a fascinating view of the best tech businesses today.
the counterfactual 