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Dec 16, 2022

Consumer Products for the Consumer Age

Stop disrupting businesses and start ‘replacing’ them instead

Building internet-disruptive products

When we raised Landa’s seed round — the most common question we got was, “why are you operating the property management side of the business yourself?” Followed by, “why aren’t you partnering with real estate companies for the day-to-day operations?” This question had multiple versions “why own properties and not partner with third-party owners?” or “why would someone invest in Landa and not in REITs?”

The answer to all of the above circles back to our conviction to being a full-stack product company, providing an end-to-end solution, from the very earliest stages.

This blog post isn’t about Landa per se, but rather, it’s about building internet-native products across domains and how we should consider the future of internet-disruptive products.

In 2011, Marc Andreessen wrote ‘software is eating the world’ to articulate the rise of everyday and global business industries becoming part of our software-first world. Today, this notion sounds entirely obvious if not self-evident. The constant application of new technologies to traditional businesses and business models has radically altered the shape of both gross and net margins in a short period of time, from advertising (Google, Meta) and transportation (Uber, Lyft) to commerce (Amazon, Alibaba) and hospitality (Airbnb,

While tech has the power to rebuild an entire market, different strategies will have vastly different results with varying degrees of success.

The ultimate question software businesses grapple with becomes, which strategies will yield enduring and impactful transformations?

The mortgage market as a case study

Let’s use the mortgage market as a case study to examine different disruption strategies. I will introduce three distinct models that a software business could implement to reform the mortgage market and then share my prediction regarding which model yields the greatest opportunity.

Tech Layer Company: Suppose you built a business-to-business (B2B) startup which provides the technology for other organizations to analyze borrowers’ risks more effectively, as well as reduces defaults and interest rates for smarter mortgages. Let’s call this the ‘Tech Layer Company.’ This business empowers another business to provide improved services. In other words, the business model of the ‘Tech Layer Company’ is to sell software as a service (SaaS) to banks.

Smart Pipe Company: The second type of business you can build in the mortgage market space provides potential home buyers with comprehensive data and customizable comparisons between different banks and private lenders. This business, as an aggregator, helps home-buyers select the best available mortgage for their circumstances. This business, now dubbed the ‘Smart Pipe Company,’ does not empower the current lender like the ‘Tech Layer Company,’ but rather mediates with the consumer and effectively cut the lender’s margin.

Service Provider 2.0: The third business does more than just empower banks or serve as a mediator between buyers and sellers in the mortgage marketplace. This business aims to replace the existing mortgage marketplace as a smart mortgage provider. Think of companies out there like Let’s call this business ‘Service Provider 2.0.’

As software startups are born, they can disrupt traditional businesses and industries everyday in one of these three different ways. Tech Layer businesses are companies like SAP or Salesforce. Smart Pipes businesses include companies like and Google Shopping. Some of the largest and most well-known Service Provider 2.0 businesses include companies like Amazon, Uber, and Lemonade.

After crunching the numbers, I believe that the Service Provider 2.0 model has a stronger case for enduring success compared to the other two models and, therefore, I believe we will see more Service Provider 2.0 companies, and fewer Tech Layer and Smart Pipe businesses in upcoming years.

If we look at the 10 biggest tech companies globally, seven are business to consumer, (B2C) (Apple, Alphabet, Amazon, Tesla, Tencent, Meta, Samsung), and only a mere three are B2B (Nvidia, TSMC, Microsoft). This is no coincidence. This trend is still only in its beginning stages.

Economic Value Propositions

By analyzing and comparing the economic value propositions of each of our three models in the mortgage market, we can clearly identify the unique value Service Providers 2.0 businesses offer over Tech Layer and Smart Pipe businesses.

Tech Layers:

  1. Provide data for banks to interface with their customers.

  2. Banks have more targeted customers and can provide more targeted rates.

  3. Banks close more deals and increase their ‘ability to repay debt’ rate.

Smart Pipes:

  1. Extensive diversity, volatility, and gaps between mortgage providers.

  2. Users seek intuitive software to compare rates and book their mortgages.

  3. Service providers share their margins with lead providers.

  4. Brand recognition and good UX reduce customer acquisition costs and fuel growth.

  5. Ability to create monopolization, increase VC funding, and support hyper-growth.

Service Provider 2.0:

  1. Brand recognition and quality UX reduce customer acquisition costs and fuel growth.

  2. Smart tech provides better rates and generates higher-quality borrowers.

  3. Learn pattern recognition to create better services and rates by collecting data from users.

  4. Ability to create monopolization, increase VC funding, and support hyper-growth.

The Vision

When looking at these three economic values, we can see that they each have the potential to grow and become successful businesses. Each company will adopt a different perspective and position regarding the market’s future, as well as the structure of its profit-sharing. However, as we observed in our earlier example, only Service Provider 2.0 bets on replacing banks instead of working with them.

Each company envisions a different future that reflects the mortgage world.

Tech Layer:

Antiquated banks— — — — — — — — — — — —> Smart banks

Smart Pipe:

B2C banks — — — — — — — — — — — → Commoditizing banks

Service Provider 2.0:

Banks — — — — — — — — — — — → Apps

The Market

Apps will begin to take a larger market share, not only from the banks, but from all businesses that sell to banks.

The Assets

Each venture builds different assets that increase their valuation.

Tech Layers:

  1. Analyzing borrower’s tech.

  2. Calculating rates’ tech.

  3. Relationship with banks.

Smart Pipes:

  1. Logical deduction of the user.

  2. Relationship with banks.

  3. Brand recognition.

Service Provider 2.0s:

  1. Logical deduction of the user.

  2. Brand recognition.

  3. Analyzing borrower’s tech.

  4. Calculating rate’s tech.

Service Provider 2.0 businesses provide numerous advantages over Tech Layers and Smart Pipe businesses.

First, the Tech Layers assets’ are deficient, in the sense that central assets of the Tech Layers are challenging to protect with patents and easily copied over time. Service Provider 2.0 businesses also cause a (gradual) decrease in the market share of banks, which in turn leads to a decrease in Tech Layers and Smart Pipes business opportunities. Additionally, mortgage applications, also known as Service Provider 2.0 businesses are better positioned to learn the technologies underlying Tech Layer businesses. Service Provider 2.0 businesses build brand recognition that ultimately outsizes the brand recognition of Smart Pipe businesses and grows a larger user base. In certain markets, non-technological advantages like brand recognition and user base are often harder to replicate than proprietary data like technology.


In the future of tech, I predict the Service Provider 2.0 type disruptors will dominate Tech Layers. While Smart Pipes are more industry-centric and therefore harder to project, they will be less valuable than Service Providers 2.0 types in industries like the loans, insurance, and investing markets.

Ultimately, why disrupt a broken industry when you can replace it altogether with something better?

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