Good Business, Bad Business – Fintech edition

When a management with a reputation for brilliance tackles a business with a reputation for poor fundamental economics, it is the reputation of the business that remains intact. – Warren Buffet

As I age in the business world, I have internalized this buffet quote. I superficially understood it early on in my career, but now I understand it! With fintech as the backdrop, this post is a view of my mental model on business models and gross margins in general. What makes a good high gross margin business?

Let’s start with a 30,000 ft view of what forms a business. Businesses exist to provide value to a set of customers via the products they create. A firm solves a need and customers pay them to solve that need. At its core, a company is a machine that takes raw ingredients (physical widgets, human capital, and intellectual capital) and transforms them into products that customers pay for. Raw ingredients cost money (cost centers) and customers pay money (revenue centers) for the finished product. A good business, in the long run, generates a consistent profit i.e (revenue – cost) is a positive number. Profit takes various forms such as free cash flow, EBIT or EBITDA – but the simple model holds, value creation only happens when what you get for the product is higher than what it costs to make it.

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To travel is to live – A journey through Booking Holdings (NYSE:BKNG)

I’m a broken record on this topic :), reading 10ks is the best free learning tool if you want to understand how businesses work. We have a 10K a month group as part of the Fintech PM guild and this month we tackled the travel behemoth, Booking Holdings.

What is Booking holdings?

Booking Holdings is the holding company for a constellation of brands and is an Online Travel agent company (OTA) that primarily serves the international market (Ex-US). It was previously known as the Priceline Group, renamed to Booking Holdings in 2018, and is listed on the NYSE (BKNG). The founding of the company has its roots in the acquisition of booking.com by priceline.com in 2005. They are headquartered in Amsterdam with operations in multiple countries. Their main brands are Priceline, booking.com, Kayak, OpenTable, and Agoda. In 2019 they did ~$15B in top-line revenue and their current market cap is ~$62B. A majority of booking.com revenue is driven by hotel bookings.Read More »

GM Chronicles Part 2: Does a product background give you an edge?

So you are a product person turned GM. What advantages do you bring to the table? What’s your edge in this role? Some of my thoughts below

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Credit: Scott Adams

Structured and systems-level thinking

Great product folks have a structured thinking approach to solving problems. Thinking in systems is a critical skill. This mode of thinking is immensely valuable and has broad applications in other areas like sales and marketing. As described in the last post, sales and marketing have a very quick rhythm, everything resets at the quota end period. This dynamic has a natural pull towards tactics that yield quick outcomes. You can easily slide into just executing on tactics without a reliable and predictable system of making Read More »

GM chronicles : A product guy learns about sales and marketing

So I’m a GM now :). Learning by writing is my thang so the next few posts will be about all things GM. Hopefully, fellow GMs and my core constituency of product folks will find this interesting and useful! The GM role in tech companies is a broad role that is accountable for a commercial (revenue and or profit) number. A GM has three levers of Product, Sales, and Marketing to achieve this outcome. Coming from a product and engineering background it was instructive to me to understand how sales and marketing differ from the product and engineering function. These are my observations/learnings from the few months on the job!

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Credit: Scott Adams

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