Thursday, August 23, 2007
Research Note: Markets, Networks, and Communities as Investment Strategy
At BGSL, our investment thesis - and our strategic perspective - is built on markets, networks, and communities as the single most powerful determinants of supernormal profitability.
That's because markets, networks, and communities let radical innovators enjoy fundamentally new sources of advantage, built on the economics of the edge, rather than the economics of the core.
Now, this isn't just about 2.0. Markets, networks, and communities are rolling like a tsunami across the macroeconomy.
So is this a valid thesis?
In fact, it's a deeply dominant one - investing yesterday in markets, networks, and communities would have earned you massive returns, while insulating you from the numerous pitfalls of idiosyncratic risk that plague markets and sectors today (ie, the subprime meltdown).
What makes firms like Google, Facebook, and Myspace different is that they intuitively understand this perspective - it's built deep into their DNA.
What makes the new breed of top tier investors - whether hedge or venture - different - is that they understand the deeper economic shifts markets, networks, and communities dominate.