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In Search of the Perfect Business Model: Increasing Marginal Utility

by
Bill Gurley
Above The Crowd
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The ultimate competitive advantage a business can possess is increasing marginal utility

  • For example, with every new purchase, Amazon obtains additional data that they can use to offer new, personalized suggestions to their customers.  
  • As Equinix gathers more data, they are also able to provide more value to their customers.  
  • Conversely, cellular carriers often have decreasing marginal utility because they tend to subsidize costs for new phones in order to acquire new customers.  
    • The cheapest way to obtain a new phone is to switch carriers.     
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