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Old January 21, 2001, 06:43 PM
Dien Rice
 
Posts: n/a
Default Another form of leverage.... selling to the right customers....

Hi Michael,

Yes, I also believe in the power of leverage!

It's amazing.... some people who started out, started out as one-person or two-person companies. Ross Perot's Electronic Data Systems started out with himself being the only employee. Microsoft started out just being Bill Gates and Paul Allen.

EDS eventually grew to have thousands of employees, and Microsoft is now housed on a campus....

Here's another type of leverage I've noticed. Leveraging your time by selling in bulk to the right people....

When you read the history of the early computer industry (such as in the book "Accidental Empires" by Robert Cringely, a pretty entertaining read by the way!), you find out that IBM originally wanted to use an operating system called CP/M. This was the standard operating system back then.

CP/M was owned by Gary Kildall, who had founded Digital.

However, Kildall apparently didn't place much importance on meeting with IBM.... When the IBM representative arrived, Kildall wasn't there. As a result, IBM didn't do a deal with Kildall. Instead, they did a deal with Bill Gates.

Gates bought some operating system called Q-DOS for $50,000 -- a kind of "clone" of CP/M -- promptly renamed it MS-DOS, and licensed it to IBM.

Kildall became known as the guy who blew the deal of the century, and Gates was the one who made it. (With a clone, I might add.... since CP/M was the original, and MS-DOS was in reality a kind of CP/M clone.)

But, the point is that by having IBM as a customer, Gates could eventually sell millions of copies of his operating system software.... Gates went to a lot of effort to land the right customer....

Online, I've noticed Jimmy Krug uses a version of this strategy with his booklets. He creates and sells booklets to corporate clients.

That way, he doesn't sell them one by one, but sells his booklets thousands at a time.

These are potentially powerful concepts.... :)

- Dien