Build: An Unorthodox Guide to Making Things Worth Making

by Tony Fadell

After companies find product/market fit, they can start to focus on profitability. Businesses that build with atoms are focused on COGS—cost of goods sold. Aside from direct labor, the main thing they spend money on is actually making the product. So they need to lower the cost of producing their product in order to reach profitability. Companies that build with electrons are focused on CAC—customer acquisition costs. Aside from direct labor, their money gets spent selling and supporting their product. Companies that build with both atoms and electrons have to worry about COGS and CAC, but generally should focus on one at a time. First knock out COGS, then move on to CAC. Build the product, then add the services. And despite the many differences between atoms and electrons, hardware and software, there is one thing that has the exact same stranglehold on both: time. No matter what you’re building, reaching profitability will take longer than you think.