- Nerd Out on Business
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Archive
Why BJ’s Makes More per Dollar Than Costco but Keeps Less
BJ’s and Costco both sell bulk and memberships, but they do so in very different ways. BJ’s leans into groceries, coupons, and flexibility, while Costco runs a powerfully simple machine. The contrast explains why their margins look so different.
The Business of Broken Cell Phones
As consumer electronics, in particular cell phones, have proliferated, there is a growing industry to deal with the acquisition, repair, and selling of these products. That is what ATRenew does. They are an interesting case study when it comes to managing consumer trust while at the same time optimizing their systems and pricing algorithms.
I had a realization as I was shopping today
Today's post is going to be different. I'm going to focus on an experience I had today trying to visit two local aquarium retailers that are no longer in business. I think there's a better approach to their business model than opening a retail store. Check out my thoughts below.
How Selling Systems Changes the Economics of a Business
When selling common components, you end up fighting on price. Acuity shows what happens when you bundle hardware, software, and distribution into a system customers value more than the parts themselves. This can be applied to a lot of companies/industries.
The Cost of Leaving Your Lane
Blend built sticky software for banks, then stepped into a low-margin, people-heavy business at the top of the cycle. The result was years of cleanup, layoffs, and write-downs. There are some expensive lessons here for founders thinking about “strategic adjacencies.”
The Quiet Power of a Deep Dealer Network
Alamo Group stitched together dozens of niche equipment makers and turned them into a durable business. The real lesson here is that if you're in a business with a heavy parts and service component, an established dealer network is a surprisingly formidable moat.
Retention Over Growth: The Instructure Playbook
Instructure's Canvas software became the default learning management system (LMS) for higher-ed by being simple, stable, and hard to rip out. With the type of customers they're dealing with, they are burdened with higher implementation and support costs. But they are a good example of where I would trade some gross margin for great retention.
The Cost of Owning Great Hotels
Sunstone owns some of the best-located hotels in the country, but great real estate isn’t the same as great cash flow. Heavy renovations, rising costs, and higher debt turned 2024 into a tough year. This report breaks down what happens when a capital-intensive business hits a slowdown.
