Sunday, February 02, 2014

Why targeting low-cost labour is nonsensical for online business models

Revenue vs labour cost in a typical brick and mortar scenario might look like this:


As revenue increases, so does the number of people you need to support it.  In this scenario, I might be very concerned about controlling labour cost.

The online version is supposed to look like this:


What we want is for the revenue line to diverge dramatically from the labour cost line.  In this scenario, I'm very concerned about having people who are highly capable of supporting the creation of that divergence.

If you are targeting low-cost labour, you're either in a non-online scenario OR you don't understand what kind of business model you're in.

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