Scalable systems and businesses

If you want to make lots of money, learning about scalable systems and businesses are a must. Making a profitable business is one thing, but setting up a condition where your business can grow to an indefinite size is completely another problem, and often a very overlooked problem.

The biggest advancements in human productivity (and at the same time, wealth) has always involved the development of scalable systems. Starting from the development of the printing press, the industrial process and onwards to the information revoution, all of these are examples of the ability productivity and profits to an arbitrary large size. The only limiation preventing infinite scaling is demand.

The biggest businesses bringing in the biggest revenues are the ones that have scaled the most easily. The finance sector is perhaps the most easiest to scale as you don't really have to produce anything and profits come in from lending other people's money. Software is another good example with the birth of Microsoft as the technology to make copies of software is arbitrary small and disks and CDs being fairly easy to distribute. Finally, companies like Google and Amazon have been able to take advantage of the scalability of the internet to do business with arbitrary large numbers of people.

What can't be scaled, and revenues at the same time, are things that are directly limited to your capacity to produce or do something. In other words, it's highly unlikely that anyone living on the productivity of their own manual labor will become very rich.

Suppose that someone opened a small burger stall somewhere. The maximum amount of money a person making and selling burgers is generally limited by their individual capacity to produce burgers. Should they work in their position for their entire life, it is much less likely that they will be able to make large amounts of money.

Suppose now that the burger flipper is now able to hire people to flip burgers, and let's assume that the burgers this stall makes is exceptionally good that demand is very high. All he would have to do is hire sufficient numbers of people to make his trademark burgers thus scaling his output and revenues at the same time. None of this would be possible had he remained a cook his entire life.

The equation for the amount of money that you should be able to pull in should be:

total revenue = profitability*scalability

Now all you need to find is something that is both very profitable and scalable as a business.