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You usually want to scale revenue, not costs....
by jmalicki 9y ago
You usually want to scale revenue, not costs....
- Retric 9y agoIdeally you scale costs to increase profit. If you could increase retinue from thin air then you're not actually scaling anything. But, in a scalable model you invest more in your leverage be that advertising or whatever and you get more revenue which assuming a good cost structure directly results in profit. Facebooks problem is they can't scale because they already own the market and there are profitable new customers available. If they spend more on advertising they simply get less profit because their costs go up without increasing revenue.