"Should I Buy The Machine?"
An entrepreneur selling beef protein chips seeks advice on whether to buy a $400,000 proprietary machine from their manufacturer. The discussion focuses on evaluating the machine's true value and the strategic importance of owning manufacturing for a differentiated product.
Summary
The conversation centers on a beef protein chip business owner who currently does about $1 million annually and wants to scale to $1 million monthly. They've been struggling with supply chain issues but found a manufacturer with a proprietary machine that produces their product every 12 seconds at a cost of $400,000. The advisor suggests that owning manufacturing capabilities is crucial for building a big brand, especially when the product is novel or different. The entrepreneur believes they could save enough money relatively quickly to purchase the machine through the increased capacity. However, the advisor recommends bringing in machine experts to evaluate whether the $400,000 machine is truly proprietary or if it's a standard machine with add-ons being overpriced. The discussion touches on the strategic importance of understanding and potentially controlling the key differentiating technology, as it could become a significant competitive advantage as the business scales and needs additional machines.
Key Insights
- The advisor argues that owning manufacturing for novel or different products is probably a good idea when building a big brand
- The entrepreneur claims the proprietary machine can produce a tray of their beef protein chips every 12 seconds
- The advisor suggests the $400,000 machine might actually be a $75,000 machine with $25,000 in add-ons that the seller is overpricing
- The entrepreneur states they believe they could save enough money in 'not that many' months to buy the machine
- The advisor emphasizes that if the machine is truly what differentiates the business from competitors, it becomes a huge point of leverage
Topics
Transcript
[0:00] I sell beef protein chips. We do about a million. Want to be doing about a million a month. We've been in the supply chain purgatory for a while trying to find a manufacturer. So, we finally found one. He has a proprietary machine that can spit out a tray of our product every 12 seconds. >> How much does the machine cost? >> Uh the machine cost about 400,000. I didn't think about buying it from him. >> Yeah. And you could buy it used. How big are your dreams for this business? Do you want this to be a big brand? >> Yeah, abs. Absolutely. Well, if you want it to be a big brand, then owning…
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