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Stop talking about ‘fake’ competition. Build a profitable one please.

Posted in Equity / Stock

This is not a property investment related article. I am writing because too many people have the wrong perception of what’s a competitively profitable company and what’s a famous and likeable company. Two totally different things yeah.  I was chatting with a close friend a few says ago. She was sharing with me about her experience in Singapore with co-working spaces. She’s a marketing manager with a public listed developer company here in Malaysia. She shared with me that many of these Singaporean co-working space operators are now coming into Malaysia strongly. I told her that this should be the trend because the market in Malaysia is bigger and definitely can provide these operators with bigger profits too. They are coming in with funds and experience and this augurs well for co-working spaces in Malaysia. The more competition, the better. These co-working offices help many potential entrepreneurs to lower their cost of operations and provide them with a lot of networking opportunities too. Think about it, even within the same company, when different departments work together, the results are often much better than what one department could do. In fact this is why there are so many business networking meetings organised by different organisations every week.

Then, we spoke about the potential for the weaker co-working space operators to lose money and later has no funds to keep improving and marketing the co-working office. The stronger ones would start getting more popular and get a larger share of the pie and would be able to expand and improve their offerings too. Plus, with more reserves, they can even lower their prices further and kill all those on the edge operators first. She said that perhaps new investors would then pump more money into these loss-making operators to sustain them? I reminded her that regardless of the company, no investor should continue to pump ever more money into a company which just could not breakeven after 5 – 6 years. Not to mention some world famous brands which are STILL losing money after close to 10 years and keep receiving ever more money and valued ever higher every year as they lose ever more money. Well, crazy but true.

For these loss-making companies which could still somehow convince investors to pump more money, be reminded that they are NOT being fair to all other competitors which are in the business for profit and are struggling to fight with these deep pocket companies which does not seem to mind subsidising their offerings to the extent that every time people use them, they lose money!  Real example. Some promotion which tells you that if the travelling distance is less than 4km, then the fare is ZERO.  Seriously, when it’s ZERO, someone has to pay for it right. And they are competing against companies which MUST charge because they could not afford to lose money. Well, guess which company is actually losing market share while somehow, the loss-making company kept getting heaps of praises.

I have been working for nearly 20 years of which 16 years were in online or online related industries. All the companies I work for strive to be as effective and efficient as possible and earn a low profit margin but aiming to have a lot of customers. We do not keep subsidising our services to kill our competitors. There’s not much strategizing needed for these strategies. Just keep convincing more investors for more money and continue killing more genuine competition until you are the only company left. Then, charges can GO UP… Well… some may never reach this stage. They have just created a fake competition. Someday, I hope to do carry out an equity crowdfunding. My aim will NOT be to get money to subsidize my services. It will only be make my company more effective and efficient and be profitable. Cheers.

written on 9 Dec 2017

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