Conversation

SBF
@SBF_FTX
1) One thing I hear people ask a fair bit: why do [x] and [y] 'partner' if they're competitors? I think it often makes total sense!
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SBF
@SBF_FTX
2) Here's one simple model of a partnership: (A) gains +X and (B) gains +Y in value from initiatives they work on. If that's your model, then the worry, I guess, is that you're helping a competitor. How does that shake out?
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SBF
@SBF_FTX
3) Well, let's take (A)'s perspective. (A) gains +X. Then (B) gains +Y. This makes (B) more attractive; let's say it increases (B)'s fraction of some zero-sum pie by i*Y. Now say that (A) is j% of the total pie. (A) probably lost j*i*Y.
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SBF
@SBF_FTX
4) Presumably less than 100% of (B)'s gain was from the zer-sum pie. i < 1. j, by definition, is < 1. So j*i*Y < Y. How much less? Well if your space has ~6 competitors, it's probably something like 0.1 * Y. You get X - 0.1 * Y; and (B) gets Y - 0.1 * X.
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SBF
@SBF_FTX
5) This means that, if it's a 'fair' deal, probably both win, and it's probably not close. Obviously this is a toy example but I think the core principle is pretty strong: by partnering you're getting a first-order win and suffering a third-order loss. So probably it's a win.
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SBF
@SBF_FTX
6) Anyway that's how I think about it. And it means that when I think about partnerships for
@ProjectSerum
, or
@FTX_Official
, I just don't worry too much about whether they're 'competitors'. I want to build positive sum products together with the rest of the ecosystem.
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