Make money doing the work you believe in
Happy Wise NASDAQ Listing Day!
As I put the finishing touches on my Wise deeeeeeeeeeep dive, I've been thinking about their scale economies shared model.
The model is certainly loved by investors, and has been very successful for companies like Costco and Amazon.
Nonetheless, what are the risks / tradeoffs associated with it?
Here at the ones I've come up with:
Requires ongoing growth to pass savings along: no growth = no savings to pass along to consumer and thus main value proposition vanishes.
As companies grow, they can hit "diseconomies of scale", when management layers become bloated, communication breaks down, or internal processes become so complex that the cost per unit actually starts to rise instead of fall. This would be a double whammy to the bottom line. Investors must rely on management to take direct steps to avoid the diseconomies of scale.
A faulty destination analysis + delayed gratification: If the company spends a decade building a massive, low-cost engine and continually passes those profits onto the consumer, but then the market shifts, well then the company has given away all of the value it has created, just in time to be left with nothing. Could stablecoins do this to Wise?
