Now that you have read my letter, you are probably wondering: are these spectacular results achievable in my company or were they the product of unusual circumstances? You be the judge…
33% CAGR sustained for 8 years
The company was a chemical company with only 4 commodity products and the highest costs of production and logistics in the industry.
Prices 2 to 10 times higher than those of the competition, with resulting margins of 50%
Did the company have anything special? The one justifying a 2 multiplier was the chemical company mentioned above. The factor of 10 was achieved by a start up, a company with no established name or credibility, entering a very conservative market: the steel industry. Its product outlasted what it replaced only by 4 to 1.
100% revenue increase in 8 years at prices 20x higher than those of generic alternatives
The company, a small specialty manufacturer, had 30% capacity utilization and costs 20 times those of its generic competition.
$200 million in new opportunities identified in 1 year, at 45 to 90% margin
The industry faced shrinking demand, resulting in 50% overcapacity and decreasing margins. All products were functionally equivalent and had virtually no differentiation that could justify a price premium.