Scaling is core of modern value creation
Updated: Aug 23, 2021
Big companies with brand has a lot of customers. Coca-cola, Microsoft, Facebook, Google. They all have a lot of customers. They provide tremendous value to its customers, loved and recognized by many, and become synonymous to our daily life.
The size of customer is scaling. Scaling is the advantage. Not the result.
Hobbies are business that do not grow.
Only big business can grow.
A modern company provide huge value over the price, giving each customer a lot of margin. They have quality workers to make quality, high value mass produced products, and they can control the price to be low. So low that the margin for themselves is not high - their per item price is just barely higher than its cost.
But the companies make a lot of money by scaling - having a lot of customers. That is the trick.
They make so much money that they can freely do R&D, increase quality and barrier of entry, buy expensive advertising spots to keep pumping their names into the air wave.
It takes money to make money. Small company or individual take small investment and make small money. Big companies take in big money and spend big money.
Value is quality, and quality takes money to build. In startup, you spend a lot of money to build quality, and then sell A LOT OF the quality items to make up for the investment. It is the same for a date of yours to say "I do".
You must focus, must specialize. Extreme specialization first, scaling later. If you serve a lot of people that is the result of expansion and growth, not initial plan. You specialize in processes. You specialize in people.
Each person/individual is also a company - when you survive you are already a business. Most people work for other businesses as employees and contractors.
Each company is at a different metabolism rate as an individual. Let's say an individual makes tomato sauce and a factory makes tomato sauce. The individual makes one bottle a day and charge for 6 dollars, and try to sell it him/her self. A factory makes 10000 a minute and changes 3 dollars to the store to carry them. (The store will use the MSRP - suggest retail price) of say 5.5 dollars. The factory spend 1 billion dollars to make the production line, and the per bottle cost to them is 2 dollars. That is how big business competes.
Each company represent a different tree in the forest - they all contribute to the ecosystem and are mutually dependent.
A company in a corporate ecosystem helps other companies to survive, and vice versa. To replace this tree is hard. To grow another tree beside this tree is also hard.
Many individuals want to start solo business. They do not realize that scaling is the key advantage that many customers seek - scaling and specialization makes consumers enjoy wide spread low cost high quality products.
A barrier that one can build, one can overcome. A barrier three build can not be overcome easily by one. That is the point of collaboration and partners.
To to faster, go alone. To go farther, go with a group.
A dream of an individual is a dream. A dream of two is reality.