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The Case for Commodity Markets - by Bala Chandrasekaran

balachandrasekaran.substack.com · 3,330 words · saved by 1 readers

The word “commodity” has long carried a deeply negative connotation in the tech ecosystem. To call a product commoditized is to suggest it lacks innovation, differentiation, and – therefore – lasting value. But some of the largest businesses in the world have been built around selling undifferentiated products at massive scale. Saudi Aramco became the leading global crude oil producer by parlaying the uniquely favorable geologic characteristics of its oil fields into structurally lower extraction costs than any of its competitors. Martin Marietta acquired dozens of regional rock quarries across the U.S. to eliminate reliance on external suppliers, reduce transportation costs, and dominate the market for building materials. These may not seem like glamorous businesses, but they created durable enterprise value by creatively carving out sustainable positions at the bottom of the global cost curve for essential industrial raw materials. While we acknowledge that low-margin business models

This piece was co-authored with Shreyan Jain. The word “commodity” has long carried a deeply negative connotation in the tech ecosystem. To call a product commoditized is to suggest it lacks innovation, differentiation, and – therefore – lasting value. But some of the largest businesses in the world have been built around selling undifferentiated products at massive scale. Saudi Aramco became the leading global crude oil producer by parlaying the uniquely favorable geologic characteristics of its oil fields into structurally lower extraction costs than any of its competitors. Martin…

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