Sterling Terrell

smart ideas from books (mostly)

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You are here: Home / Potpourri / 2 Keys To A Product Based Business

2 Keys To A Product Based Business

2 Keys To A Product Based Business

The two things needed for success in a product based business are these:

1. A large audience.
2. The ability to scale.

I jotted all this down when I originally read this. But these points seem obvious on reflection.

First, a large audience – the attention of a large number of people – is necessary to sell anything.

This is why bloggers will 1,000 unique visitors per month are not offered book deals. And bloggers with 2,000,000 unique visitors per month can easily get a book deal with a $250,000 advance.

Second, the main and most lucrative difference between product and service businesses is the ability to scale.

For example, a product-based business can maybe sell 1,000 units with 10 employees, and a move to 10,000 units sold might only require 12 employees.

Service-based businesses, however, usually lag in this area. In the same example, a move from 1,000 units to 10,000 units might require 80 employees.

I like this potential part about blogging, you don’t necessarily need more people to have a bigger blog. 

For every Huffington Post or Vox with a large staff, there is a Tim Ferriss or Maria Popova doing amazing work with nothing but an assistant.

Why is it that so few consulting businesses successfully launch a product? What made Moz’s case unique? And why, given the success of our consulting efforts, did we decide to move to a software subscription model? There are two traits fundamental to an effective product-focused business. The first is reach (i.e., the ability to influence a large audience). The second is scalability (i.e., an aptitude for growing revenue far more quickly than costs).

-Rand Fishkin, Lost And Founder

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Filed Under: PotpourriTagged With: #Attention, #Scalability

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