I really enjoyed this one. An interesting pattern I think we will see a lot of is it won't be an either / or with respect to asset light versus asset heavy. A lot of business can get their start in asset light, generate cash and integrate forward or backward in the value chain to make the moat stronger for the reasons you lay out. For example, DoorDash with restaurants, Airbnb with space etc. I recently read Merchants of Grain and this is exactly what happened. Grain merchants generated tons of cash because capital requirements were low and available leverage high. Then, they integrated backward into selling farmers seeds and forward into processing and distribution infrastructure. A hundred years of runway an while returns were lower, economic $ profits are what matter. Also, the initial capital efficiency of being a merchant allowed for tight control.
One datapoint about Microsoft salaries: In Douglas Coupland's "Microserfs", the main character has (at the beginning of the tale) been an MSFT employee for a couple of years and his salary in roughly 1992-93 is $26k.
I really enjoyed this one. An interesting pattern I think we will see a lot of is it won't be an either / or with respect to asset light versus asset heavy. A lot of business can get their start in asset light, generate cash and integrate forward or backward in the value chain to make the moat stronger for the reasons you lay out. For example, DoorDash with restaurants, Airbnb with space etc. I recently read Merchants of Grain and this is exactly what happened. Grain merchants generated tons of cash because capital requirements were low and available leverage high. Then, they integrated backward into selling farmers seeds and forward into processing and distribution infrastructure. A hundred years of runway an while returns were lower, economic $ profits are what matter. Also, the initial capital efficiency of being a merchant allowed for tight control.
One datapoint about Microsoft salaries: In Douglas Coupland's "Microserfs", the main character has (at the beginning of the tale) been an MSFT employee for a couple of years and his salary in roughly 1992-93 is $26k.