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Would you rather invest in the business model of a cinema or Netflix?

A theater needs real estate, seats, projectors and staff. When it’s full, you top out at ~200 paying customers per show. 

Netflix beams the same video to its first customer and its millionth customer with basically the same operational cost.

That zero marginal cost is the intuition behind why investing in tech is attractive. Once you’ve built the product, each additional user generates a high gross margin, which produces sky-high multiples.

Now, that mental model — of zero marginal cost + uncapped demand —…

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