Some good observations on tech business strategy here
Low-margin can still mean high-value-business:
“Most people just look at a company’s margins and judge the quality of the business model based on that, but the cash flow characteristics of the business can make one company a far more valuable company than another with the exact same operating margin. Amazon could have had a margin of zero and still made money.”
Preventing the number-1 biggest threat to a mainstream company (disruption):
“Study disruption in most businesses and it almost always comes from the low end. Some competitor grabs a foothold on the bottom rung of the ladder and pulls itself upstream. But if you’re already sitting on that lowest rung as the incumbent, it’s tough for a disruptor to cling to anything to gain traction.”
And … an idea I’d considered more seriously back when I started in iOS development. This was the perfect way to disrupt agencies (tough and unpleasant though it was):
“Not having to sweat a constant onslaught of new competitors is really underrated. You can allocate your best employees to explore new lines of business, you can count on a consistent flow of cash from your more mature product or service lines, and you can focus your management team on offense. I”
