Bill Gurley On How Internet Marketplaces Unlock Economic Wealth

I’ve long been a believer that true Platforms don’t magically appear by integrating products together.

True Platforms create new products, jobs, and economies that might not exist if the Platform did not exist. That’s a Platform. That’s a moat. With the right resources, product features and integrations are easy to clone. An economy can’t be cloned (because humans can’t be cloned - yet).

When I joined Intercom in late 2015, the title of my first post on their blog was “Building a developer economy around Intercom.” At their Inside Intercom event in 2016 I presented the same idea in “What software companies can learn from shopping centers.”

Platform Strategy is an economic challenge. Technology is a means to make that strategy a reality.

With that little setup out of the way, I thought it might be worth sharing one of my favourite recent essays about Platform Strategy, penned by Bill Gurley.

In case you’ve never heard of him, Bill is best known for his role at Benchmark. His 2011 $10 million Series A bet on Uber realized one of the best returns in venture capital history. He was an early investor in Grubhub, Instawork, Stitchfix and Zillow.

He knows how Platform economies are built.

His 2019 essay “Money Out of Nowhere: How Internet Marketplaces Unlock Economic Wealth” is a fantastic refresher on economic theory, from Adam Smith (and his book “The Wealth of Nations”) to David Ricardo (who became wealthy by betting on the outcome of the Battle of Waterloo).

It could be argued that Bill Gurley became wealthy by betting on the outcome of Platform battles.

Starting with a nice reference to Thomas Friedman’s book “The World Is Flat” (which I bought second hand on Amazon, the ultimate example of world-flatness) Bill brings us through modern Platform Economic history, from Airbnb to Alibaba, Uber to Upwork.

He reliably uses an asterisk (*) to label the companies Benchmark invested in. More than a few.

An essay well worth reading. For some shorter-form essays worth reading, follow Bill on Twitter.