(1/) The other important point that was easy to miss in the ep is how misleading gross margin % numbers can be and how @sequoia has changed their view over time. What matters is margin $'s, not margin %.

(h/t to my @AcquiredFM partner-in-crime @gilbert for calling this out) https://twitter.com/AcquiredFM/status/1356278348083683328

(2/) "Software businesses" are usually high gross margin %. But they only support a portion of customers' end economic activity.

Alfred: "with Software businesses, you’re paying for just the software. You’re not looking at all the transactions that happen on the software."

(3/) With marketplaces or full stack businesses like Amazon, DoorDash, Airbnb etc, the whole economic transaction is your top line (showing up as GMV or Revenue). In those cases low GM % still == high GM $.

(4/) The key is not to get these categories confused. Low gross margin software businesses are usually bad businesses. (e.g., low @hamiltonhelmer Power)

Low gross margin marketplace/full stack businesses can still be great, high Power businesses -- if the TAM is very large.

(5/) Interestingly, high gross margin marketplace/full stack companies are not always great businesses.

Facebook and Google are for sure. But when your effective take rate is too high, you create huge incentives for disintermediation and substitute-seeking.

(6/) See @bgurley's classic piece "A Rake Too Far" for full discussion. http://abovethecrowd.com/2013/04/18/a-rake-too-far-optimal-platformpricing-strategy/

(7/) If you are going to attempt a high gross margin marketplace/full-stack business, you'd better have incredibly high Power. Because your customers will probably wish they didn't have to depend on you.

See: Google, Facebook, Apple's App Store cut, etc.