The place to be

“It’s hard for businesses like ours to be profitable/fast growing/whatever because [insert a genuinely sensible reason that’s hard to argue about],” is something I hear quite often.

I completely understand – after all, I often actively encourage people to look at businesses similar to theirs to get some benchmarks and intel. If you’re building a software-as-a-service company, knowing that 70-90% gross margin is pretty normal in your space is a helpful data point; so is knowing that this tends to be a lot less if you’re selling groceries.

That said, building a company is an unending creative problem-solving process. And sometimes it is helpful to ask, “how can I make this work?” rather than assuming, on no-matter-how-reasonable grounds, that there is no way. The answer, quite likely, won’t be found by looking at your peers – but outside of your sector. What works for someone else – even if in a different context – that you can adapt and make your own? What’s the best place you can be, and how can you get there with whatever it is that you’re building?

In a world where beauty companies have margins of software (L'Oréal's gross margin currently stands at 73%, while Salesforce is at 74%*), car manufacturers buy bitcoin, and sneakers get traded like stocks, the question is not whether your product can have the stickiness of Google Drive, the margins of Adobe, and the social impact of Patagonia – but how.

Love and cash flow,

Jana