Do Things That Scale: Starting a Business That Will Take Off


Manage episode 208614443 series 2340125
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There are only so many hours in a day so you need to build a business that can grow while you're sleeping, on vacation, or working on your next business. You have to do things that scale when starting a business that will take off. While we are discussing scaling a business, there are plenty of other areas of life that you can scale including investing and video games. What is Scale? To scale a business means to create a system, product, or service that can generate more money through some resource that isn't your time. Scale is typically used in computer science. We have a website that can support 100 people. How can we scale it to support 100,000 people? Scale is a concept that is meant to support infinite growth. When starting a business, you want to find ways to apply your time and money that are scalable and to shift your focus from things with a hard maximum return to things that have the potential to be infinitely scalable. Scale is Sexy Sexy sells and is why Amazon is such a sexy business. When Amazon recently announced that the cost of Prime would go from $99 a year to $119 a year, they scaled their revenue without doing any additional work or spending any additional money. Amazon Prime is not a physical good, it can be sold over and over, and the price can continue to increase. Those price increases create revenue out of thin air. Things That Scale If you're looking for a business idea, these are examples of a things that scales. Digital Creations Microsoft coded the first version of Windows once and have since sold it hundreds of millions of time. Windows 7 has sold 450 million copies. Subscriptions How many of us pay for a monthly gym membership we don't use? Or a domain name that is dormant. Do you subscribe to magazines you don't read? When you have a business based on subscriptions, retention is more important than acquisition. You've switched the customer's resistance from purchase to cancelation. This is why Trim is such a great model; it's a business that scales because there is no end to the number of people who have subscriptions they don't use. Why don't they cancel them? Because it's a pain in the ass to do so. Trim does it for you. Podcasts, Blogs, YouTube Channels Each episode of LMM has a fixed cost to create. It's Andrew, Thomas, Laura, and my time. But once we publish each episode, everything after is profit. Sometimes an episode makes a lot of money, and sometimes it languishes out there. Gangnam Style has been viewed more than 3.1 billion times. From Youtube views alone, it has made $870,000 and more than $8 million in total. Things That Can Be Automated Things that can be automated are things that scale. The average profit margin for a dry-cleaning business is 150%! It's not unheard of for the business to make a $1 profit on every article they clean. Why so high? Because almost all of the dry cleaning process is automated and it's a service that there is always a need for. Car washes are another excellent example. The employees don't even touch your car; the whole thing is automated. The only expenses after set up apart from low paid employees are water and soap, both of which are cheap. (As an aside, I have never driven and lived in NYC for 15 years where no one else did either.

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