Business models Archives - Assert Digital Ventures

Esports and the Dangers of Serving at the Pleasure…

April 28, 2020April 28, 2020
by Andy

Informative post on the economics and drivers behind the eSports industry. In summary, looking at it through the lens of IRL sports leagues (e.g. NFL, MLB, NBA, FIFA) is wrong. First, game publishers control everything through their game copyrights so you have to get their blessing to broadcast anything. Second, game publishers view eSports leagues and tournaments as marketing vs. revenue. Their ultimate goal is to expose the game to as many casual gamers as possible so they buy. In addition, income from merch and digital goods is mostly pocket change. However, they need to support this channel and there’s constant gamesmanship (sorry, had to) and jockeying for power. The title is apropos.

Still, excessive expectations aren’t sufficient to explain the struggles in the ecosystem. “If you looked into it, [the number of money-losing teams] is probably closer to 89 percent than 50 percent”, one esports executive told Kotaku. That has nothing to do with valuations or, in a direct sense, money raised. A number of teams have shut down, sold their rights to individual leagues, or otherwise scaled down. This isn’t necessarily bad. The industry is still finding its footing. But it also isn’t how leagues with capped competition and guaranteed revenues are supposed to work. And overall, the operating environment for any esports-based company remains shaky at best and boasts few success stories and myriad failures. To understand why, it’s helpful to start with what an “esports league” is. Most of the problems start from the fact that when you hear “esports league”, you think in terms of physical “sports leagues”.
https://www.matthewball.vc/all/esportsrisks

Elon Musk’s strategy for Tesla is ?

November 25, 2019April 26, 2022
by Andy

With Tesla, people often forget several asymmetric advantages they have right now:

They do no marketing saving a significant % of revenue where traditional automakers in hyper-competitive situations must
They capture most of the sale price of the car due to a lack of dealer commission/cost meaning significant margin/pricing advantages
The perceived value of their cars (e.g. resale value) is much higher due to most of the car being “updatable” via software
They have vertically integrated the energy storage (batteries) and source (superchargers) giving a distinct technology and cost advantage (some of which passes onto their customers)

As they scale, it will be interesting to see which of these erode first.

Tesla Cybertruck

Futuristic, polarizing design aside, I actually think the Cybertruck is brilliant on multiple levels. First, the specs are off the chart when compared to the truck market today. Second, by doing an exoskeleton design (vs. traditional frame) they have key disruptive advantages that competitors cannot easily respond to. Finally, even though they compared it to the F-150, its smart to market this to a niche (and possibly new) truck buying audience. Expanding the market is always a better path but not always available. Besides the technical advantages in manufacturing, the planer design clearly puts people on the love/hate line and no one will have a hard time comparing and deciding vs. a traditional pick-up. Tesla runs on and builds enthusiasts. Why stop with their truck?

Netflix is not a tech company

August 18, 2019August 18, 2019
by Andy

Discussion of how Netflix is not a tech company but a “TV” company. One thing the analysis missed is that Netflix is using hyper-niche proprietary content to lock people in.

Netflix realised that you could spend far more money on far more hours of scripted drama than anyone had ever spent before, and you could (hopefully) make your money back by selling it on subscription directly to consumers instead of going through aggregators, using a new technology, broadband internet, that both gave you that access and made it possible for people to browse that vast selection of shows.
https://www.ben-evans.com/benedictevans/2019/7/31/Netflix

Amazon as experiment

August 18, 2019August 18, 2019
by Andy

Experimentation is at Amazon’s core. Culturally what it means is that “ideas” are not judged out of hand by those “in the know” but based on evidence. Nothing is bad, just untested.

Also a good point around the shopping aspects Amazon doesn’t do well as they do not focus much on shopping experience: “can it work out how to let us shop, rather than just buy?”

I sometimes think that if you could look in the safe behind Jeff Bezos’s desk, instead of the sports almanac from Back to the Future, you’d find an Encyclopedia of Retail, written in maybe 1985. There would be Post-It notes on every page, and every one of those notes has been turned into a team or maybe a product.

Amazon is so new, and so dramatic in its speed and scale and aggression, that we can easily forget how many of the things it’s doing are actually very old. And, we can forget how many of the slightly dusty incumbent retailers we all grew up with were also once radical, daring, piratical new businesses that made people angry with their new ideas.
https://www.ben-evans.com/benedictevans/2019/7/26/amazon-as-experiment

Existing companies execute a business model, startups search for…

August 18, 2019August 18, 2019
by Andy

From the Lean LaunchPad manifesto:

“Existing companies execute a business model, startups search for one.”
https://steveblank.com/2012/03/29/nail-the-customer-development-manifesto/

True.

Only edit I’d make is that existing companies who also aren’t also searching for new customer needs will be sideswiped one the startup figures out their model.