Building a company to make money
March 14th, 2010There are three main models (when looking at the founders point of view):
- Build it as big as possible, expand the infrastructure/distribution/value factory, aim to make a little bit on each part in the factory. Whole aim is around making it bigger than the founders.
- Keep it as lean as possible, focus on the small, deliver maximum value. Aim here deliver tremendous value to make excessive profits.
- Build it fast to exit. Little worries on profitability, reinvest to make profit (for founders) via exit.
Bonus Option
You are so remarkable you create a monopoly. This adds extra profit in any option (probably mostly in the first option).
Just a few different thoughts/models on how to frame it in your mind.
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Tags: building, exits, founders, money, startups, value creation
This entry was posted on Sunday, March 14th, 2010 at 5:00 pm. 
March 14th, 2010 at 5:17 pm
My view is this:
Number 1: Pits you against competition. The competitors are too big and there are too many of em.
Number 2: Keeps you fast moving, unique and valuable. This is the model for maximum innovation.
Number 3: Relies too much on being in the right place at the right time.
I prefer to stack the odds in my favour and go with #2.
Great post Ben!
– Peter
March 14th, 2010 at 5:24 pm
I’m with Peter on this one – keep in lean and nimble. Very few people have the capital or clout to go for option 1, and the chance of creating a monopoly in this age of technology and regulation is next to impossible.
March 14th, 2010 at 5:42 pm
“aim here deliver tremendous value to make excessive profits”
Translated from the Chinese I see.
Perhaps you missed;
4. Create a simple formula that can be franchised (small central company, large network) – profit from scaling up, and avoiding the donkeywork.
5. Network of smaller co-dependant businesses that are independant but mutually beneficial. E.g. an online ad network, several blogs, a web development firm and an accounting/payroll firm. View the group as a whole, and grow by adding cells.
6. etc, etc, etc.
It’s no longer that simple any more – a business is no longer just one company. You can be small, more diverse, and semi-independant – but gain strength in a group.