(social 🏔️)

Is Revenue Model More Important than Culture?

5 min read

  • source https://somehowmanage.com/2020/09/20/revenue-model-not-culture-is-the-dominant-term/
  • by Ozzie Osman
  • … dominant term. This is the term that dominates the limit.
  • … countless other factors or parts of the equation that matter initially, but eventually it’s that dominant term that wins.
    • … dominant term rule.
  • Google … launched a design change that made search results and ads look very similar.
  • … companies have grown really large, are arguably monopolistic, and hyper-focused on growth and revenue.
    • Over and over, they have made decisions that have resulted in backlash from the press and from their users.
  • … “don’t be evil” motto was still around, and as engineers who were building parts of the product and making decisions, we were pretty ideological about it.
  • Revenue is the Dominant Term

    • When a company is first built, several variables dictate its decisions:

      • … implicit values/culture of the early team. As Ben Horowitz would say, “what you do is who you are.”
      • … explicit values/culture of the early team. Are we user-centric? Data-driven? …
      • … revenue model.

    • … revenue model is the dominant term.

      • … limit of a product towards infinity, so to speak, is based on its revenue model.
      • If your revenue model is ads, you are an ads company.

    • … companies that can hire some of the smartest people in the world, gather massive amounts of data, and build technology more sophisticated than ever.

      • And be trying to “maximize shareholder value”.

    • … all of me wants to believe culture always wins. But I’ve had my idealism crushed enough times by hard realities.

    • … over the long term, a company (and its product) will morph to take the shape of its revenue streams.

    Well I think I’ve been in the top 5% of my age cohort all my life in understanding the power of incentives, and all my life I’ve underestimated it. And never a year passes, but I get some surprise that pushes my limit a little farther.” — Charlie Munger

  • Even though there might be other variables that influence our behavior, you can still simplify things down to incentives. Incentives are his dominant term.
  • A System View
    • … company is not a product, but rather, a company is a complex system that creates a product,
      • you can take a system’s view …
    • … essay quite famous with “system thinkers”, Donella Meadows outlines the “leverage points” of a system …
      • 12. Constants, parameters, numbers (such as subsidies, taxes, standards).
        1. The sizes of buffers and other stabilizing stocks, relative to their flows.
        1. The structure of material stocks and flows (such as transport networks, population age structures).
        1. The lengths of delays, relative to the rate of system change.
        1. The strength of negative feedback loops, relative to the impacts they are trying to correct against.
        1. The gain around driving positive feedback loops.
        1. The structure of information flows (who does and does not have access to information).
        1. The rules of the system (such as incentives, punishments, constraints).
        1. The power to add, change, evolve, or self-organize system structure.
        1. The goals of the system.
        1. The mindset or paradigm out of which the system — its goals, structure, rules, delays, parameters — arises.
        1. The power to transcend paradigms.
    • … organizations can have cultures that “transcend paradigms”, but in the modern corporate world, these are rare.
    • … organizations based on cultures that transcend paradigms can create both massive good OR massive damage.
  • … mindset out of which a system arises.
    • Most modern companies arise and operate in a mostly capitalistic paradigm, and have goals of maximizing shareholder value via growth and revenue.
      • … over time, the way that revenue can be grown will dominate almost anything else, even the explicitly stated goals (aka its “mission”), because the paradigm creates implicit goals that outweigh the explicit ones.
  • … if you do care about more than money,
    • if you care about the impact your work has and you want to be proud of what you do, it’s worth thinking through this a little more deeply.
  • … classic example that we’re all now aware of is free products.
    • So they sell ads, or data, or some mix of the two that their users don’t quite understand.
      • … success for the company means
        • more time spent on the product (which may or may not be a good thing for users),
        • less privacy (definitely not a good thing for users), and
        • ultimately more ads.

Jun 11th, 2026 by Jean-Denis Caron

Graph View