4 ms·
Sure. You start a PC repair business. At first, losing a stick of RAM or frying someone's motherboard is super costly when you are doing 10 a week. But once you
by esikich 5mo ago
Sure. You start a PC repair business. At first, losing a stick of RAM or frying someone's motherboard is super costly when you are doing 10 a week. But once you're doing 1000, that's pretty damn good and easily covered. When you have more tools, velocity, and whatnot, the proportions change.
- altmanaltman 5mo agoWouldn't you lose multiple sticks or fry multiple motherboards as you scale and do 1000? If you're frying 1 at 10, that means you're frying 100 at 1000. Your costs etc will scale as well unless you actually lower the risk/reward ratio, no?
- kuboble 5mo agoI think the point is that at small scale a single accident poses a risk of ruin to your small operations.
- chrncirurp 5mo ago> I think the point is that at small scale a single accident poses a risk of ruin to your small operations. At big scale, a single big accident poses a risk to ruin your big operations.
- enraged_camel 5mo agoNo, it does not. Every large company eventually has a big accident. They survive because they have both the resources (e.g. to fight ensuing legal battles, or pay fines, or simply weather a hit to reputation and the resulting downturn in revenue) as well as redundancy, different types of insurance, and so on.
- zaphar 5mo agoThey also survive because they invest those resources in some amount of mitigation ahead of time. They don't survive when they don't scale their mitigations along with the business.
- daveshistory 5mo agoCompanies of all sizes should have insurance to cover such scenarios. You need to get tradesman's insurance on your repair work, or you need to ask yourself why the insurance companies won't insure you.
- truculent 5mo agoThe point is that if you have a 10% chance of frying motherboard, at 10 a week, you might expect 1 fried p/w, but it could easily be more which may be catastrophic. At 1000, the number of fried boards will be more predictable and therefore the risk to the business is lower, even if the long-run averages are the same.
- TeMPOraL 5mo agoAt 1000, you can afford better tools and better employees, and replacement parts get cheaper as you order in bulk, and you can explore clever strategies to smooth risk curves. At 100 000, you can afford a better and continuously improving process, and dedicated facilities, and skilled experts, and parts get even cheaper because you're a volume buyer or perhaps own the supply side, and you get to set your own risk curve. Lots of things get cheaper at scale. Insurance, too.