Thread by @theryanking

Building a company is like building an army:

Aside from physical violence, companies and armies are basically the same.

Each must be incredibly strategic about resources, attack plans, and alliances.

Each must keep their troops happy with either a righteous mission (missionaries), good compensation (mercenaries), or both.

Like a good attack-plan, companies must define their vector for attacking a market.

You might have heard that every software company is either a bundler or unbundler.

This is spot-on.

Some do more than incumbents while others do fewer things exceptionally well.

Like an army, a company has a thirst for expansion.

Successful at doing X, they soon need to generate additional revenue.

This means that they start offering Y, Z, etc.

This is generally a good idea because they can bundle pricing, charging less per product than competitors.

AWS is a great example.

They gobbled up every independent infrastructure tech company.

Those companies had no chance against AWS's bundling.

AWS can achieve economies of scale with significant cost advantages.

As a result, they also can do everything far cheaper.

There's another key advantage: bundlers already have the customer.

Additional upsells are easy: minimal incremental sales, marketing, or onboarding costs.

This is their superpower.

They’re able to leverage this customer relationship to drive scale, revenue, and value.

However, as with armies, there are pitfalls to rapid expansion.

If a company tries to bundle too aggressively and prevents customers from using external services, customers can feel “forced in” to their ecosystem.

Think old British Empire or our Military Industrial Complex.

A good example is a commerce platform saying you cannot use external providers for payments, checkout, etc. (… biased! hah)

In order to bundle successfully at scale, the company like an army has to be good at:

1/ Building new tech/innovation
2/ Maintaining strong relationships with its customers/people
3/ Not scaring away critical partners//allies

Like an army, when a company expands either 1/ too fast or 2/ too slow, therein lies the opportunity for competition to arise.

A competitor can come in from a completely different entry point.

Think of this like a beachhead… the unexpected ones are the most powerful.

Ie D-Day

If the dominant company is strong at X and Y, the competitor can come in with a superior product line Z and then expand up the stack to X and Y.

Especially if Z is super strategic.

There’s also a time and place factor.

Perhaps Z was not critical in the past but now is.

At the end of the day, a company is designed to be profit-seeking.

This means they are conquering territory.

But unlike war, it’s not zero-sum.

Companies can conquer through innovation, good employee care, and providing immense value to end-customers.

And that’s it!

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