In a perfect internet market, the marginal cost of a digital product is zero. But markets are not perfect. And that means you must find ways to deliver great values to users even as the marginal cost tends to near zero.
Why? Customers in the digital space congregate more into an ecosystem when the marginal cost is very low. When you have a low marginal cost, customer growth improves and when that happens, you would experience a positive continuum of network effect where great products trigger more customers, and more customers, compounding better experiences.
In Tekedia Mini-MBA (registration continues here), I have used a metric called Scalable Advantage (SA) to model how fast a company can scale within the internet space. Scalable Advantage (SA) is a nexus with numbers between 0 and 1 which is used to ascertain the organic capacity to grow an enterprise, by examining the inherent elements like marginal cost and external forces, within an unconstrained and unbounded internet economy, where if nearly perfect, all transaction and distribution costs between demand and supply disappear, producing an SA of “1”. At the other end, it is “0” which means marginal cost is rising with volume.
Tekedia Mini-MBA edition 15 (Sept 9 – Dec 7, 2024) has started registrations; register today for early bird discounts.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
Today, I want to ask you: What is your Scalable Advantage? Does it get towards “1” or “0”? The trajectory will determine how far that business will go. I have a simple chart to help with a video which explains what determines if a business can scale, not just grow. In Tekedia Capital, a company must have at least an SA of 0.7 before we can invest!
---
Register for Tekedia Mini-MBA (Sept 9 – Dec 7, 2024), and join Prof Ndubuisi Ekekwe and our global faculty; click here.