I’ve been doing a lot of thinking lately on our strategic objectives — where we are today, where we want to be in a few years, and the tactics in between to navigate us to a long-term maximum (and hopefully avoid compelling, but ultimately sacrificial local maxima). One of the most efficient ways to set up a business for successful long-term goals is to shrewdly align the go-to-market in ways that go around your competitors entirely, versus having to compete head-to-head.

Germane to this topic is this piece I’d bookmarked at some point from Gwern, an excellent deep analysis of an idea Joel Spolsky wrote about back in 2002: that smart technology companies seek to commoditize their complements. If you haven’t read any of Gwern’s essays before, you’re in for a treat. One of the most information-dense writers out there.

In general, a company’s strategic interest is going to be to get the price of their complements as low as possible. The lowest theoretically sustainable price would be the “commodity price”—the price that arises when you have a bunch of competitors offering indistinguishable goods. So:

Smart companies try to commoditize their products’ complements.

If you can do this, demand for your product will increase and you will be able to charge more and make more.

This idea is explored more in Peter Thiel’s Zero to One, which posits that capitalism and competition are opposites: one generates profit, the other destroys it. If you can commoditize everything surrounding your single chokepoint advantage, you can build a business with a deep, wide moat.

Related: check out Ben Thompson’s writing on “smiling curves,” where the profits in a value chain are unevenly distributed to the layers in a stack.