

Everything I learned in business I learned from these 3 charts - sayemm
http://entrepreneur.venturebeat.com/2010/07/08/everything-i-learned-in-business-i-learned-from-these-3-charts/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Venturebeat+%28VentureBeat%29

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run4yourlives
He missed a big one, sadly.

Here's what I've learned about business, and it applies universally to pretty
much everything.

[http://upload.wikimedia.org/wikipedia/en/3/33/Project_Triang...](http://upload.wikimedia.org/wikipedia/en/3/33/Project_Triangle.svg)

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techiferous
The right technology can change that game. Consider book distribution before
the printing press vs. today. Better, faster, and cheaper.

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run4yourlives
I've got news for you, you aren't building a printing press no matter how much
you think that you are.

That's why nobody heeds the diagram; everyone is so sure they have the world's
first printing press.

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techiferous
Most categorical statements are only useful as heuristics, not as hard and
fast rules.

EDIT: I agree with your statement as a heuristic, but not as a rule. Printing
presses do, in fact, exist. Someone had to invent the technology.

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run4yourlives
This one is about as hard and fast as you can get though. That's my point. The
moment you leave room for printing presses, you leave room for everyone to
just assume they are building one.

I agree that occasionally, a revolution comes along. However they are called
revolutions for a reason, and the odds are highly stacked that while you may
indeed be building a successful product, it is not going to be revolutionary.

The key to all that is that even if it is, and you follow the diagram, it will
cause you little to no pain. Too many people think that their particular
project somehow escapes this simple truth. That's the problem.

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yosho
Coming from a semi business background, I can say I've learned a lot more in
business than purely relates to those 3 charts.

He barely touched on accounting, financials, and economics.

He didn't talk about organizational behavior, effective management, and team
structure.

Sometimes, I feel like everyone dismisses business because a lot of it isn't
that quantifiable... but really, the difficulty of business is IN the fact
that most of the skills involved can't be quantified.

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nielr1
The reason that i didn't touch on any of these things is that the necessary
skills for them all (that you mention and many more) are relative to a point
in time and very much related to the charts i talked about. Let's use an
example: what's "the right" organizational structure. By definition it changes
as a company grows. An organization will need to be structured differently at
3 people, 12 people, 30 people, 65 people, etc.. This is, in fact, a
demonstration of understanding the S-curve and how it applies all over a
business. Something parochial like accounting is actually the same thing. The
complexity of our accounting (and need for systems, experts, auditing, etc..)
was directly related to us hitting a network effect in our business. As they
say - you can run accounting of a bad business really well.

I'm not disagreeing with you just noting that my piece was much more about how
to recognize patterns that emerge in a business everywhere and know which
pattern you're working with to make tactical and strategic decisions at the
right time.

I've written quite a bit about financials, the economics of startups, etc..
Here is a good example about business model integrity on my blog:

[http://parallax.blogs.com/parallax_calculating_tech/2006/05/...](http://parallax.blogs.com/parallax_calculating_tech/2006/05/why_every_entre.html)

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mahmud
More of this please. Business made sexy with quantitative measurement and
analysis.

What do you call this field of study? Any book recommendations on analytic
business like this?

I want more!

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krmmalik
I've recently been introduced to this sexy side of business too.

I havent had a chance to read it myself, but i was recommended a book called
"competing for analytics" by Davenport.

Maybe that will be of use to you? (Are you on GoodReads incidentally?)

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nostromo
> If you find yourself in [a bifurcated distribution] scenario, you’re likely
> heading towards a problem.

I know several companies that offer small business and enterprise solutions,
with entirely different pricing, sales teams and compensation, and they do so
very successfully. The author doesn't say why this is a problem, just that it
is. I think this broad statement needs more support.

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dgudkov
I suggest the author's point is differentiation - not using the same
model/approach for different businesses.

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nielr1
Clearly many businesses have bifurcated price points. I totally agree this can
work. The question is when? If you walk into Target you can buy a pack of gum
and a $1000 garden set. My point was in the context of most startups (tech
primarily) its usually a bad sign in your business when very early on you see
bifurcation in pricing. I've been involved in many businesses that have seen
that and the ones that convinced themselves they could serve both types of
customers learned the hard way that you only get to do that when you've got a
solid foundation in your business of one type or another.

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lbrandy
It should be pointed out that this is actually 2 charts. The final chart is,
in essence, just the first half of the sigmoid.

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lmkg
Not really. If you cut the sigmoid in half they do look similar, but that
doesn't mean that they're the same function. They behave differently (the
Sigmoid has an inflection point, which is a Big Deal), but more importantly,
they represent different types of relationships. The final graph shows
population growth or network effects, both of which have the potential to be
unbounded[1]. The sigmoid has a definite carrying capacity. In fact, knowing
if your chart is really the last one or the first half of a sigmoid is very
useful, because that tells you whether you need to plan for an inflection
point.

[1] This depends on what the x-axis represents. If you're plotting against
time, you'll always be bounded due to finite resources. If you're plotting
against resources or network size, value and even marginal value can be
unbounded.

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DennisP
The idea that linear businesses are bad leaves out businesses like 37Signals,
which seems to be doing well. Each customer is pretty much self-contained.
They aren't really connected to other customers, so there's no network effect.
But 37Signals seems to be doing pretty well. They aren't going to grow
massively and be the next EBay, but they do have a nice profitable business.

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yurylifshits
"Sigmoid" observation also is known as "Diminishing returns"

<http://en.wikipedia.org/wiki/Diminishing_returns>

