"One of Warren Buffet’s most famous quotes is that “In business, I look for economic castles protected by unbreachable ‘moats’.”"

"An “economic castle” is a great business, and the “unbreachable moat” is the strategy or market dynamic that heightens the barriers-to-entry and makes it difficult or ideally impossible to compete with, or gain access to, the economic castle."

"For Google, the economic castle is clearly the search business, augmented by its amazing AdWords monetization framework. Because of its clear network effect, and amazing price optimization (though the customer bidding process), this machine is a monster."

"Perhaps the most telling map with regards to the location of the castle can be found in Jonathan Rosenberg’s “Meaning of Open” blog post."

"“In many cases, most notably our search and ads products, opening up the code would not contribute to these goals and would actually hurt users.”"

"Basically, any product that stands between the user and Google and has the potential to distract the choice of search destination is a threat."

"From time to time, this fee must be negotiated, and as a result there are constant rumors that Firefox might chose another search engine, like Bing."

"Android, as well as Chrome and Chrome OS for that matter, are not “products” in the classic business sense."

"They have no plan to become their own “economic castles.” Rather they are very expensive and very aggressive “moats,” funded by the height and magnitude of Google’s castle. Google’s aim is defensive not offensive."

"They are not trying to make a profit on Android or Chrome."

"They want to take any layer that lives between themselves and the consumer and make it free (or even less than free). Because these layers are basically software products with no variable costs, this is a very viable defensive strategy."

"The Android version of the “AppStore” shares the majority of its economics with the carrier and handset makers."

"Because they are “giving away” money to use their product, this creates a rather substantial conundrum for someone trying to extract economic rent for a competitive product in the same market."

"I don’t know if a large organized industry has ever faced this fierce a form of competition – someone who is not trying to “win” in the classic sense."

"Perhaps the resulting counter-force to this is that if someone can afford to build a near equivalent code base, than they can at their option price to marginal cost ($0.00), the very definition of perfect competition."

"One might yearn to suggest that there is a market unjust here that should be investigated by some government entity, but let us not forget that the consumer is not harmed here – in fact far from it. The consumer is getting great software at the cheapest price possible."

"John Doerr, once said “The Internet is the greatest legal creation of wealth in history.” Android may be the opposite of that, the greatest legal destruction of wealth in history."

"A true marketplace needs natural pull on both the consumer and supplier side of the market."

"You must also organically aggregate demand."

"Highly liquid marketplaces naturally “tip” towards becoming a clearinghouse where neither the consumer nor the supplier would favor an alternative."

"New Experience vs. the Status Quo. Great marketplaces do not simply aggregate a market; they enhance it."

"They leverage the connective tissue to offer the consumer a user experience that simply was not possible before the arrival of this new intermediary."

"Economic Advantages vs. the Status Quo."

"If you can positively change the economics of an industry, you will find the participants on both sides rooting for your success. This gives you a huge head start when it comes to tipping the marketplace."

"Opportunity for Technology to Add Value."

"High Fragmentation."

"High buyer and supplier fragmentation is a huge positive for an online marketplace."

"Friction of Supplier Sign-Up."

"High friction supplier signup can be a barrier to entry (as it is for OpenTable) if you are able to build a successful marketplace."

"that supplier aggregation is the easy part. Aggregating demand is much harder and more critical."

"Size of the Market Opportunity."

"A proper TAM (total available market) analysis is imperative, but it is easy to make mistakes looking only at TAM"

"As a starter, if all the other factors are negative, it will not matter that the market is large."

"Expand the Market."

"Another potential error that can be made while analyzing TAM is to fail to understand that the features and enhancements of the new marketplace may actual expand the market opportunity for the whole industry."

"Frequency."

"All things being equal, a higher frequency is obviously better."

"Many failed marketplaces attack purchasing cycles that are simply way too infrequent, which makes it much more difficult to build brand awareness and word-of-mouth customer growth."

"Another repeated mistake is attacking verticals where a satisfactory supplier “match” end’s the customer’s need to re-enter the market in search of an alternative."

"Payment Flow."

"All things being equal, being part of the payment flow is superior to not being a part of the payment flow."

"This is due to the fact that it is much easier to extract reasonable economics when you are in the flow of payment."

"Network Effects."

"It is unlikely that you will find a marketplace opportunity that would score ten out of ten with respect to this list. However a 7 or 8 out of 10 would imply that your opportunity of success is much, much higher than if you only match 3 or 4 out of 10."

"The Uber network, along with Mr. Smith’s invisible hand, is able to elegantly match supply and demand, without the “schedules” and “shifts” that are the norm in most every other industry."

"That feature — worker autonomy of both time and place — simply does not exist in other industries."

"85% say they partner with Uber “to have more flexibility in my schedule and balance my work with my life and family”"

"55% of drivers work less than 15 hours a week, highlighting that a majority of drivers use the service for supplemental income"

"Friday and Saturday nights are simultaneously the consistent weekly peaks of (a) demand on the Uber system, and (b) spare time that is available for people with standard full-time jobs that want to pick up some incremental income (the chart to the right highlights this)."

"A bridge while looking for a full-time job — In the above survey 32 percent of driver-partners indicated a major reason they partner with Uber is “to earn money while looking for a steady, full-time job.”"

"If people are in need of learning new skills, they would be materially aided by the presence of a flexible and autonomous supplemental income opportunity as they retrain."

"“Independent work could have benefits for the economy, cushioning unemployment, improving labor force participation, stimulating demand, and raising productivity. Consumers and organizations could benefit from the greater availability of services and improved matching that better fulfills their needs. Workers who choose to be independent value the autonomy and flexibility.”"

"One thing to note about most of the scenarios above is that they are “temporary.” There is not a desire or intention on the part of the driver-partner to do this as a lifelong career pursuit."

"Independent work is undisputedly “different” from a traditional job type — which is exactly why it is so valuable to so many people."

"Instead of making labor conform to management’s notion of a ‘job,’ Uber hands control to the worker."

"You do not have to make your life fit the needs of your job; you can make the job fit the needs of your life. Just how revolutionary this notion is has not, in my opinion, been adequately understood."