Data businesses have high fixed costs to create an asset, not variable per-customer costs. This model shows poor initial gross margins but scales exceptionally well as revenue grows against fixed COGS. Investors often misunderstand this, penalizing data companies for a fundamentally powerful economic model.

Value-based flat fees should not just reflect the initial time estimate. As a business becomes more efficient and reduces the time required for a task, the flat fee should remain the same. This allows the business, not the client, to reap the financial reward of its accumulated experience.

Many AI coding agents are unprofitable because their business model is broken. They charge a fixed subscription fee but pay variable, per-token costs for model inference. This means their most engaged power users, who should be their best customers, are actually their biggest cost centers, leading to negative gross margins.

By positioning itself as a platform agent, Apple sidesteps legal precedents that would limit who can sue for anti-competitive pricing. This shifts legal liability to developers, as consumers become the "direct purchasers" with legal standing to sue them over App Store prices.

During major platform shifts like AI, it's tempting to project that companies will capture all the value they create. However, competitive forces ensure the vast majority of productivity gains (the "surplus") flows to end-users, not the technology creators.

Vanguard's first index fund had a ~2% expense ratio (180 bps), far from today's near-zero fees. This historical fact shows that for innovative financial products, low costs are an outcome of achieving massive scale, not a viable starting point. Early fees must be high enough to build a sustainable business.

Courts are forcing Apple to abandon its 30% revenue-sharing model for external payments. New rules mandate that fees must align with the actual costs of providing the service, like a toll road, rather than being a tax on the developer's overall economic success.

While TikTok's on-platform digital courses offer a new monetization path, the revenue model is highly unfavorable. After Google takes a 30% app store cut, TikTok takes another 50% of the remaining revenue, leaving creators with just 35%.

Thompson critiques Apple's lucrative services strategy as a shift from creating the best products to "harvesting the profits from other companies' innovations." The argument is that this rent-seeking behavior is corrosive to the company's core DNA of product excellence and innovation.