Morgan Housel is a partner at Collaborative Fund and a former columnist at The Motley Fool and The Wall Street Journal. He states that the gap between a great product and a great business can be ten miles wide.
We need to know what a Product and Business simply means:
- A product is something that can solve someone’s problem.
- A business is a product that serves so works so well that people will pay more than it costs to produce.
All great businesses are backed by great products, but not all great products turn into great businesses, so it’s important to separate the two different things.
A product can be great if it lives in the top few boxes of the pyramid. Getting from there to the bottom is incredibly hard. Figuring out how to make a business work means running losses for a period of time. But losses incurred to build tomorrow’s infrastructure are different loses incurred because it can’t charge the customers a price that reflects what it costs to run the business.
The best way to achieve the vision of building a company that will last for generations is to build a good business with the same passion as making a good product. And that strategy needs to be implemented early on to the last generation in the business. And it has nothing to do with losing the focus of the product.
Source: https://www.collaborativefund.com/blog/great-products-vs-great-businesses/
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