The ambition is not the problem. The cost implications are.
In general, young companies flourish when they are really good at a small number of things. Then, as their reputation grows, they can branch into new products or markets. This approach minimises early cash-burn and significantly increases the chances of long-term success.
The reason is quite simple. A company's cost function depends on several variables, most importantly the:
1. number of products (SKUs) they produce or sell; and
2. number of geographic markets they serve.
It therefore follows that, the fewer products and the fewer geographic markets that a company enters, the lower its initial costs. Basically, concentrating on only one market or product line etc results in significant economies of scale, whereas a diversified start-up never reaches sufficient scale in any product or market to achieve said economies.
This is partly why 50% of all new firms die within 5 years (at least in NZ).
So, while I applaud CPH's ambition and vision, the financial realities paint a far less appealing picture to me.
DYOR etc.
CPH Price at posting:
92.5¢ Sentiment: Sell Disclosure: Not Held
