“Buy for a dollar, sell for two.” – Proposition Joe, The Wire
You don’t need to know Proposition Joe from HBO’s “The Wire” to understand the wisdom of his business mantra: “Buy for a dollar, sell for two.”
I am constantly amazed by how many businesses neglect the basics of business economics. Dazzling technology. Hockey stock growth projections. Negative margins.
The Wire is the best show ever made. Period. (Dear Reader: Fight me.)
In the ruthless world of Baltimore’s drug trade, Proposition Joe not only survived but thrived. His success was not a result of luck or brute force, but of careful dealings and a steadfast focus on economic fundamentals.
His strategy, encapsulated in the mantra ‘Buy for a dollar, sell for two’, was a beacon of survival and prosperity through smart economics.
Whether you’re leading a nimble startup or a sprawling multinational, sound economic principles apply. They are the bedrock of success, guiding decisions and ensuring a business’s longevity.
Gross Margin Matters
The principle of ensuring a positive gross margin sounds elementary—earn more from your products than they cost.
Yet, many companies today (particularly tech companies – or those masquerading as tech companies) are seduced by the allure of rapid scaling and market capture and forsake profitability for growth.
They pump capital into ventures without a clear path to profitability, betting on potential rather than performance.
It’s a troubling trend: businesses chasing user numbers or market presence without a sustainable financial model. That will only work until it doesn’t.
Every dollar saved in production costs and every increment in the price above cost directly contributes to financial health and competitive strength. When running a business, you always have to reduce costs and also find ways to increase prices.
Buy for a dollar, sell for two.
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