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Bill Gurley & Michael Mauboussin - Putting Theory into Practice - [Invest Like the Best, EP.370]

Invest Like the Best with Patrick O'Shaughnessy

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Value Based Strategy Framework and Business Value Creation

Value based strategy framework focuses on elements like consumer willingness to pay, price, company cost, and willingness to sell. By increasing willingness to pay through network effects, companies can enhance consumer surplus and potentially raise prices. This framework emphasizes continuous efforts to increase consumer willingness to pay, which in turn boosts consumer satisfaction and future pricing power. Furthermore, by creating value on the demand side and leveraging economies of scale to reduce costs, companies can drive significant value creation and achieve exponential growth. The rarity of such value-creating strategies is highlighted, with successful implementation often seen in companies transforming into platform businesses, demonstrating the significant impact on value creation when executed effectively.

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