>But, then how come all of the above companies built empires?
By leveraging credit on those consistent low margins and not being ran as badly as most software companies that could not function without 50+% margins or infininte free credit.
Or by coming up with an adjacent industry that does make profit. (airlines, desktops, phones not made by the korean or fruit companies)
>Or by coming up with an adjacent industry that does make profit.
Or being owned by the company making the profit , after said company realised how much they were spending on 3PL when they already had HR/depots/etc that could be used for trucking companies.
> But, then how come all of the above companies built empires?
Scale based on insane amounts of venture capital and debt. If you're running 450M transactions a day like Mastercard, you only need a few cents per transactions in profit and you have a money making machine.
For example, car companies hand out huge bonuses to employees who figure out even a dollar in lower costs - at the scale of, say, Toyota with 8.6 million cars a year [1], that amounts to 8.6 million dollars more in profit. Give the employee in question a hundred thousand, the employee is happy and the beancounters even more.
Or airlines... when your average plane will always have a number of no-shows (around 5% [2]), it is more profitable to overbook and in the rare case that it does go wrong, pay off someone with 500$ in cash.
Well, do you need profit to make an empire? If your $major_company takes in $100B in revenue and spends it all, that's a lot of money to spend that will pay a lot of people across many industries. I'd say that counts as an empire, and I dare say I like it better than the one where the emperor gets all the ducats.
Only at HN:
1. Credit card processing is a razor thin margin business
2. Trucking is a low margin business
3. Retail is a ultra low margin business
4. Airlines don't make money
5. Phones is a low margin business
6. Desktops don't make money
7. Cars is a money losing venture
But, then how come all of the above companies built empires?