“Well, I don’t want to leave money on the table.”
I’ve heard that a lot recently. And it’s driving me insane. It’s a perfectly good metaphor, but as a business concept, it has almost no relevance to industries or businesses that are in emerging or growth stages. In the tech industry, and especially for emerging products and markets, the resistance to “leaving money on the table” is basically a shorthand way of saying “we have no long term strategy, so we have to maximize short term returns at all costs.” If the market is growing, it’s often more profitable to have more competitors than fewer, and to have partners who are more profitable rather than less.
Extracting every bit of possible profit from potential partners means that you’re making it just-barely-worthwhile for people to do business with you. It means that every single person you’re doing business with is on the verge of walking away. And it means that people you don’t even know about have already chosen not to do business with you based on word of mouth or your marketing collateral.
Sure, if you’re Walmart, and you’re in a mature to saturated market, you have to claw for every penny, because every little bit of profit that you pass up is gone forever. And if you’re Walmart, you have the market clout to extract so much profit that you can actually ask vendors to sell to you at a loss just so they can enjoy economies of scale and actually turn a profit selling to other customers. But if you’re reading this blog, you’re probably not Walmart. You’re probably a consultant or a strategist looking to launch a product or technology. And in that scenario, critical mass is far more important than maximization of this quarter’s revenue.
And that’s why I always leave money on the table. I’ll pay a little more than I have to for contractors, and I’ll take a little less than I could from partners and clients. I will allow and even encourage development of add-ons that enhance my ventures, even if I could probably squeeze a bit of cash out people interested in doing so. In short, I’ll leave money on the table in the short term because I know that the industries I play in are very early stage, and the long term returns from being part of something huge are worth far more than whatever additional revenue I could squeeze out of partners and clients today.