4 Comments

Lovely piece, haven't heard it framed with this analogy before (Pressure cooker).

This may be more company specific, but isn't the analogy on Evolution slightly different. They are alienating their customers, whereas Amazon may be alienating their merchants but customers still get the benefit, leaving customers still feeling pretty good about Amazon? However, you could argue that Evolution's customers are not the gaming operators but the users.

Expand full comment

Thank you, I'm glad you enjoyed it!

It's a great question because it identifies an area I wanted to go deeper into in a future piece: where does the goodwill lie? You can imagine most companies have multiple parties like suppliers, employees, partners, in addition to end customers.

There is a second factor here too: who pays? This also will be fleshed out in a future piece, but the profits don't always come from the person paying for the good. With Amazon for instance they primarily monetize through the commisions they charge sellers and advertising. Customers have to pay for the product, but Amazon's "price increases" would come via charging merchants more which may result in higher prices to the end consumer.

Evolution is similar in that the players do not pay them. But the commisions they set with the operator could influence the odds or promotions they in turn can offer customers. So Evolution increases prices via higher operator commisions which in turn may result in worse payouts (which effectively is a price increase).

For both companies the focus of preferences that are being fulfilled are at the consumer level (Amazon with shoppers and Evolution with gamblers) and the merchants or operators are just a means by which they fulfill those preferences. These are the end consumers because they drive the business and the operators and merchants are effectively modularized, if not commoditized.

Copart in contrast is almost the opposite situation. They would view their end customers as the insurance companies because supply is highly concentrated and the salvage vehicle auction buyers are fragments and perfectly substitutable. Thus the majority of commisions charged fall on the buyer and not the insurance company. Insurance companies love Copart, but the auction buyers think they charge too much... much like the gaming operators or Amazon Merchants. The point is the business doesn't leave much if any goodwill at that level because there is litte or nothing to be gained from it.

Thanks for the great question!

Expand full comment

Nice article, wonderful insides

Expand full comment

Thank you, appreciate it!

Expand full comment