Monday, April 23, 2012

How to lose money

Here's a sure-fired recipe for losing money:

  1. Build a business and a brand around a wildly popularly product that has an almost 50% *net* profit margin -- a ridiculously high return on investment in today's world. Count your dough and gloat.
  2. Suddenly decide you don't want to be in that business -- that you want to be in *another* business, that is more fashionable but which has never made money.
  3. Deride the customers of your "legacy" product -- the wildly profitable one -- as old-fashioned, and do your best to keep new customers from buying your "legacy" product, instead forcing them to buy your new unprofitable "fashionable" product before you'll let them buy your profitable "legacy" product.
  4. Profit! Err.... *NOT*.
Netflix has done the sure-fired recipe for losing money mentioned above, and whadya know, they lost money! Whocuddapredicted, eh?

-- Badtux the Snarky Penguin

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