The bigger your volume, the more it makes sense to buy over rent or do it in-house instead of outsourced. As volume increases, the fixed costs from buying or bringing in-house is dwarfed by the cost savings from eliminating your counterparty's margin.
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This general rule seems obvious but it has many interesting applications: - Buying a home - Amazon's decision to operate it's own delivery trucks - Hiring I wonder if Netflix should build their own content delivery and processing?pic.twitter.com/Kj8ov0LSY2
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Counterexamples: - Counterparty competitive advantage - Counterparty commodity business, low-margin - Need for flexibility, volume is not consistent.
9:03 PM - 8 Feb 2020
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