Building a company to make money

March 14th, 2010

There are three main models (when looking at the founders point of view):

  1. 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.
  2. Keep it as lean as possible, focus on the small, deliver maximum value.  Aim here deliver tremendous value to make excessive profits.
  3. 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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3 Responses to “Building a company to make money”

  1. Peter Shallard Says:

    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

  2. Chris Young Says:

    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.

  3. a dog called dave Says:

    “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.

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