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Thanks for the comment, Marlene. Its founding history and business model are reflective of a company that isn’t trying to disintermediate the agents, given that for purchases of this level of materiality (e.g. house / car), consumers will dig around a lot online but eventually go to look at the product via an agent at least once. On the value capture point, as with other classifieds businesses (e.g. auto), the difficulty in establishing commissions on sales lies in attributing the true driver of a consumer’s decision to purchase. At the moment, Rightmove focuses on leads generated and full page ad views as tangible metrics that agents can track and pay for. The link between the ads and a lead is more easily drawn than that between the ad and an eventual sale. Also, part of the value of the ads is that it sends a consumer to an agent who may end up upselling a higher priced property to the consumer, something that would be ignored by the commission approach. The user data point is interesting, and I think a direction that companies like Rightmove will move towards as they look to offer more targeted advertising options for agent customers. However, it will be important for them to toe a fine line and not allow privacy concerns to be a deterrent for consumers.

On December 14, 2015, UB commented on Netflix: Revolutionizing Content Creation and Distribution :

Excellent example of a company that responded to changes in technology and consumer preferences by altering its business model. The move into creating its own content shows that collaborators (third party content providers) can also be competitors and vice versa. While this is a smart move in that it makes Netflix not entirely reliant on these other providers, I wonder if these providers might retaliate in some way by grouping together to create a Netflix competitor and subsequently cease to provide content to Netflix. If this is a legitimate risk then it would make sense for Netflix to invest heavily to build up a wider content library, and perhaps shutting down the DVD business, as Will suggests above, would free up capital to do this. One thing that wasn’t clear to me was the map of DVD distribution centers at the top. When was this taken? I ask because if this is really still the case today then surely they could look to drive efficiencies by rationalizing this huge base of centers and benefiting more from the asset-light model that most online businesses enjoy.

Hi Mon, interesting post. This is an area I’ve been doing some work in recently as it’s closely linked with my Field 2 project in China. Having walked the streets of Boston talking to people in their 20s and 30s about their wealth management preferences during Dash Day, I see a lot of value in Wealthfront’s approach so far. Of the sample we spoke with, a significant majority was suspicious of existing wealth management platforms, largely due to a lack of financial know-how, so Wealthfront’s focus on educating its customers makes a lot of sense. For those who did invest their wealth, this was usually only in the form of employer 401(k)s, so granting the ability to roll these into Wealthfront is smart too.

To David’s point on customization above, our research found that millennials were indeed overwhelmed by the range of more active management options available in the market, and the potential number of decisions they might have to make themselves. Automated investing, albeit with some room for them to input their individual risk appetites and have these drive the percentage allocation of equities / fixed income, is therefore hugely appealing. Agree with David that as their wealth accumulates over time, the specific range of inputs they will want to provide will become wider and wider, but robo-advising technology will no doubt continue to become increasingly sophisticated as well.

On December 14, 2015, UB commented on Topgolf Fore the Win :

Hi David, enjoyed reading this and am certainly keen to try one of these if they ever set one up in Boston! I usually end up playing competitive mini-games when I’m on a driving range, but the lack of microchip-enabled balls means there’s invariably a lot of arguing about who actually got closer to the pin…

I like how they’ve designed the facilities so as to encourage new golfers but I do wonder whether the business will stand the test of time. People have combined casual sports entertainment with good food and cold beer on tap for years (bowling alleys, pool or ping-pong bars etc.) but I can’t think of many off the top of my head that have managed to be consistently successful over the long haul. Perhaps there is a risk that more casual golfers flock to Topgolf as a fad of current times before moving on to something else? Topgolf might need to keep innovating its offering to keep them coming back, but like Arturo above, I do wonder whether the business is doing enough to retain serious golfers. While it can try to balance its offering somewhat, at the end of the day it might need to make call on whether its core target market is serious golfers looking to hone the specifics of their swing or groups of amateur golfers looking for something other than just going to their local bar.