My theory of Business evolution

Business is about profiting from scarcity.

  • Demand – Supply =  Scarcity
  • Price – Cost = profit

Evolution in business :

  1. Pick current Scarcity (and which has price $$) fill it with abundant supply
  2. Which creates / props-up new scarcity.
  3. Become leader in servicing the new scarcity.
  4. And the next generation will strive to make the new scarcity abundant and repeat the cycle.

Mass production

Reduce common costs thus increasing profits

Luxury business

High price for extreme unessential (for living) scarcity.

Broadcast model

Zero price subsidized with Ads revenue on a high volume

Google search

Zero price, low cost subsidized with Ads on very high volume

Amazon

Minimum inventory costs for large volume resulting in discount price

Music business

Zero price for music, high price for related experience

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