VCs will learn to love franchises - by Yoni Rechtman

Tech-enabled services didn’t work in the last cycle because the businesses were too hard, complex, and expensive to run. Too many things have to go right and even then they didn’t out-earn the traditional incumbents (usually they did much worse!) The managed marketplaces also didn’t work because of the whole “management” issue. Supporting massive customer support and supply-side recruitment teams makes it impossible to be wildly profitable. That’s just gussied up tech-enabled services. The consensus answer is to sell vertical SaaS to those categories instead. But vertical SaaS often has structural issues selling into many categories and is increasingly going after thinly sliced, small end markets unlikely to produce venture outcomes. The obvious solution is franchising: McDonald’s sells inventory, demand, and operating capacity to its franchisees. They don’t need to run all the locations or manage the staff. McDonald’s just needs to optimize the “McDonalds Platform.” And McD’s does it

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• Ritvik Varghese