So scalable businesses one where the unit cost to build extra units of your product is almost zero. So a perfect example of that is with Microsoft when they built, for example, Windows 95. So that build that very first unit, it cost millions and millions of dollars to get that first version and put it on that first CD. But then after that, when you’re doing the next CD and even the next million CDs, the marginal cost is almost zero and it plummets very rapidly. So that first unit cost a lot of money and then after that it goes down very quickly. And certainly today with downloads and this type of thing, the marginal cost of an additional download is almost zero. So you build a business that’s extremely scalable because you can sell millions and millions of units and almost no marginal cost after that first unit. And so you can scale the business very rapidly and yes, you have things like marketing costs, but it’s the unit cost per product that really matters in terms of a scalable business. Now, there’s companies out there like Skip the Dishes and DoorDash that try to scale in the same way but they aren’t really the same at all. So with DoorDash, for example, they have to deliver that meal and let’s say there’s a problem along the way. The car breaks down or whatever. This is called the last mile problem. They aren’t able to deliver. So not only is the customer unhappy that they didn’t get their product, you probably have to give them a refund and maybe even credits and so you’ve actually lost money on that sale. Or maybe you have a bad actor that’s doing your delivery and who knows what’s going to happen there. So these are all part of the last mile problem that Microsoft didn’t experience because they don’t have to worry about that. Yeah, the CD has to get to the store or the download has to work whatever, but it’s a very different problem from having to deliver food on time and get it right every time. These are scalable businesses in very different ways. And I would say that the Microsoft way is much, much more scalable than what DoorDash is doing because they have that last mile problem. And so that’s the type of business that if you can do it, you want to build those kind of scalable businesses that don’t have the Last mile problem.
