Charles and Louis-Vincent Gave, along with Anatole Kaletsky have written a brilliant and easily read 150 page book called Our Brave New World.
John Mauldin highlights some important points made in the book : Until proven wrong, the trend of tech-dominated NASDAQ is higher, while the trend of the GM's, Ford's, Alcoa's, US Steel's and the like are downward in broad terms. The 'platform' companies sell high margin design; the others sell low margin manufacturing. In the post-industrial age, we need to own the former and to be short of the latter. The book echoes the simple understanding that, in the words of Lord Keynes, 'The facts have changed, and when the facts change, we change.' The 'facts' of the world have indeed changed, and we want to own design firms, software firms, pharmaceutical firms, firms that sell high end services, companies like IKEA (if it were public) that sell high end goods but have all of the manufacturing hoved off to the cheapest place of manufacture and can drive costs down while holding margins high. The facts have changed and we need to understand that."
"Platform companies" are the wave of the future. We are not talking here about tese type of platform companies.The platofrm companies referred in this post are companies which design and market, but let someone else manufacture. Thus they have lower capital costs and are less subject to economic downturns, as they have no factories to shut down or workers to lay off. There are no legacy costs and no unions to fight. If anything, given the nature of the global economy, there aren't going to be many products insulated from the global pricing structure - even services. So, platform companies are the new growth companies - not by virtue of what they sell, but by virtue of how they are organized. This means we shall see more & more of product development in software getting outsourced. So it’s the age of solectron’s and competitive advantage comes in terms of flexibility, speed of response , customer delight – all pointing to the supremacy of business models and the ubiquitous nature of processes.
Category :Platform Companies