“too hungry to eat.”

I was reading a great article at Business Insider today about Silicon Valley investor Marc Andreessen. They spoke of a recent interview with Tim Ferriss (author - The Four Hour WorkWeek). Ferris asked Andreessen what words would he put on a billboard. Andreessen answered, "Raise Your Prices".

The reason behind it is evidently Silicon Valley start-ups have been in price wars to the extent the mentality has been to sell anything and everything as cheaply as possible to gain the greatest number of sales and/or shares. This led to the coining of the phrase, "too hungry to eat". He went on to explain, “They don’t charge enough for their product to be able to afford the sales and marketing required to actually get anybody to buy it. And so they can’t afford to hire the sales rep to go sell the product.”.

It just goes to show you, going on the cheap has consequences, something I have long professed in my businesses since the eighties. It has long been my opinion to cater to the people with the money, and make sure you provide them the best bleeding edge products and services at the highest prices they can bear. Eventually the market catches up, but it is during the period the market is catching up with you and the volume in sales increases where the companies providing the bleeding edge products and/or services earn their monies to advance faster than the competitors can. "It's the first kitten out of the box that gets the pick of the tits" as my grandmother used to say.

Have any of you ever structured and adjusted your company posture in this fashion. I agree with Andreessen with this, keep the prices as high as possible for as long as possible before the milling heard of competition catches up with you. By that time, you are off leading them all on another chase anyways.

 

Yup, that was a good lesson to learn. Always know what the market is willing to pay for the best and negotiate that for your self as best you can.