Capital Efficiency
Posted on October 8, 2008 - Filed Under Business |
“Dude, you’re going way to fast.”
My mentor and I were zipping along Pacific Coast Highway on our way to dinner. I had just finished briefing him on where my online adventure was at and also some doubts about whether the October 15th deadline would be met.
I was confused. “Are you saying I shouldn’t launch?”
“Not at all,” he replied. “But you need to grasp the concept of capital efficiency.”
During my race to launch, I wanted to be able to have mobile applications for people. Platforms such as the iPhone, Palm, Windows Mobile and our friends in Blackberry land. Since I planned on offering two versions of each software, a Lite and a Pro, the total developmental was building.
Capital efficiency revolves around the concept of how much money you’re putting in versus how much you’re getting out. Think of it in terms of gas mileage. The more efficiently your engine burns gasoline, the more bang for the buck you get. If you put $50 worth of gas into your gas tank, do you want to get 6 miles to the gallon or 40 miles to the gallon? Most would opt for 40 miles.
Capital Efficiency runs on the same principle. How much money is going in versus how much is coming out.
What I was wanting to do was spend a good chunk of money, producing all kinds of applications for all kinds of platforms. As altruistic as this sounds, it’s not an efficient use of my capital. It should be consumer demand which drives the release of products. If there is absolutely no demand whatsoever for my product then I’ve only invested a small amount of money instead of a large amount.
Here’s the plan.
(1) The iPhone application will be released first. Take whatever feedback is provided and work to make the application better.
(2) Meanwhile, people with other types of mobile devices can indicate their interest on the main website. I’m working on creating a “notify me” email listing of sorts, which is how people can let me know they are interested in a certain product.
New products can be pushed out fairly quickly.
Suddenly making the October 15th launch window has become more solid.
If you liked that post, then try these...
All I ask is a Tall Ship on March 15th, 2008
Nearly five years has passed since I went sailing.
The Cheeseburger Factor on March 3rd, 2008
Take two steps into the blog world and articles will beam the virtues of increasing readership via lists.
Comments
2 Responses to “Capital Efficiency”
Leave a Reply
Sad in Blackberry land.
@Paty: I definitely wouldn’t be sad. I’m loving that new blackberry model they are coming out with. Nice!