The ratio of a part's cost to its raw material cost. A high ratio means a dumb process worth attacking.
A cost-physics lens for finding margin hiding inside any product or service: when something sells for far more than its materials, the gap is process — and process can be fixed by whoever cares enough.
Quinn Miller's model is deliberately unsophisticated: he buys cans of Coke at Costco for 33 cents and sells them for a dollar out of machines placed across about 10 locations he cold-called into.
“So he buys a can of Coke from Costco for 33 cents, and he charges a dollar for it, right?”
Shaan's advice to young founders: relationships and skills compound while the businesses themselves usually don't, so don't compare yourself to peers who took salaried jobs at 18 months. Treat it as a 10-year game and only read the scoreboard at the end.
“you're 23 years old now. Like, here's the trick to this whole thing. You're doing the right thing every day. You're just making stuff, you're trying stuff, you're making content. You're having a blast with your buddies. We're going to measure the scoreboard when you're 30, not when you're 24.”
Steal thisTreat your 20s as a 10-year game; bet on relationships and skills, and don't judge results year to year.
Kagan estimates ESPs pay roughly $0.00015-$0.002 per email sent, and frames email companies as very expensive hosting where the real profit comes from subscribers who never send. Substack and SendFox disrupt this by making sending free and monetizing elsewhere.
“$0.002. It might be $0.00015 times how many subscribers, how many emails they're sending a month. The profit is all in the people who don't email. It's basically, I think of email marketing companies as very expensive hosting. You're basically paying a lot of money to host zeros and ones and digits that don't cost anything.”
Nick Bare says his supplement products run roughly 60% profit margins after cost of goods and shipping, before payroll and marketing overhead.
“Yeah, we can have roughly 60% profit margins.”