The ambition is not the problem. The cost implications are. In...

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.