I’m a big fan of frameworks, they help us categorize and make sense of the world around us. As you are building products, frameworks help you systematically approach the process. I’ve always been intrigued by Reid Hoffman’s quote that mapped consumer social products to the seven sins. This was a great framework to map a product strategy to a core human instinct, in this case, vices.
If you ever talk to MBA’s (especially those into finance) you will hear them wax eloquent about a company’s capital structure. Capital structure is nothing but how a firm finances itself. Firms need money to operate. How do they get that money? They have a couple of choices – just rely on the profit they generate, issue shares to investors (issue equity) or borrow money from investors (issue debt). The choices that a firm makes and the mix of self financing vs equity vs debt is what is termed as the capital structure of the firm. Having a structure formalizes things, makes company profitability easy to analyze, brings predictability.
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