{"id":2188,"date":"2013-01-28T16:18:54","date_gmt":"2013-01-28T15:18:54","guid":{"rendered":"http:\/\/t-machine.org\/?p=2188"},"modified":"2013-01-28T16:18:54","modified_gmt":"2013-01-28T15:18:54","slug":"amazon-and-the-high-value-of-a-low-margin-business-model","status":"publish","type":"post","link":"http:\/\/new.t-machine.org\/index.php\/2013\/01\/28\/amazon-and-the-high-value-of-a-low-margin-business-model\/","title":{"rendered":"Amazon and the high-value of a low-margin business model&#8230;"},"content":{"rendered":"<p>Some <a href=\"http:\/\/www.eugenewei.com\/blog\/2012\/11\/28\/amazon-and-margins\">good observations on tech business strategy here<\/a><\/p>\n<p>Low-margin can still mean high-value-business:<\/p>\n<p>&#8220;Most people just look at a company&#8217;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.&#8221;<\/p>\n<p>Preventing the number-1 biggest threat to a mainstream company (disruption):<\/p>\n<p>&#8220;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&#8217;re already sitting on that lowest rung as the incumbent, it&#8217;s tough for a disruptor to cling to anything to gain traction.&#8221;<\/p>\n<p>And &#8230; an idea I&#8217;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):<\/p>\n<p>&#8220;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&#8221;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Some good observations on tech business strategy here Low-margin can still mean high-value-business: &#8220;Most people just look at a company&#8217;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 [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14,46,3],"tags":[],"_links":{"self":[{"href":"http:\/\/new.t-machine.org\/index.php\/wp-json\/wp\/v2\/posts\/2188"}],"collection":[{"href":"http:\/\/new.t-machine.org\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/new.t-machine.org\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/new.t-machine.org\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"http:\/\/new.t-machine.org\/index.php\/wp-json\/wp\/v2\/comments?post=2188"}],"version-history":[{"count":0,"href":"http:\/\/new.t-machine.org\/index.php\/wp-json\/wp\/v2\/posts\/2188\/revisions"}],"wp:attachment":[{"href":"http:\/\/new.t-machine.org\/index.php\/wp-json\/wp\/v2\/media?parent=2188"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/new.t-machine.org\/index.php\/wp-json\/wp\/v2\/categories?post=2188"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/new.t-machine.org\/index.php\/wp-json\/wp\/v2\/tags?post=2188"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}