Hamilton Helmer: prediction

Transcript context

…The easy obvious example of this that has been discussed much in the past decade is Airbnb versus Uber. Airbnb has so much unique supply that you're not going to find on booking.com, HomeAway, or any other platform. Whereas, Uber, it's like, yeah, I can get a car on Uber, Lyft, DiDi, or whatever. First, you have to meet two conditions. The value that one platform delivers has to be materially better than the other. Remember, this is a matching situation. I won't get into the technical aspects of it. But basically, it's equivalent to a distance formulation. Even in multidimensional space is a square root function, which means the second derivative is negative, which means that it flattens out after a point. When it flattens out and whether there are two competitors that are both in the flat region is a critical element there. Even if that is true, that it isn't flat enough between the two of them and there is a real material difference in deliverables, then the thing that maintains that difference, which is different scale on at least one side, has to be maintained. The degree to which multihoming is frictionless is critical. We just see that play out so frequently in the startup, technology, and venture investing space. I have on my mind because we're researching right now, NVIDIA. They were the first computer graphics chip company in Silicon Valley. They thought that was going to be so great. They had such a great team and so much funding from Sequoia and Sutter Hill, and it was going to be great.…

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