According to Jim Collins, a great company exists to fulfill its core purpose. Making profits is important but not the purpose. Profit is the blood for the organization to live and follow its purpose.
The Avid Hog’s only purpose is to do the best possible business analysis. That leads to our hedgehog concept. In chapter 5 of “Good to Great”, Jim Collins talked about the hedgehog concept. Geoff and I answered 5 questions posed by him to define our hedgehog concept:
1. What is our one – simple, crystal clear – hedgehog concept?
Answer: Presenting an above average business at a below average price.
2. What can we be the best in the world at?
Answer: Doing buy and hold investment analysis.
3. What drives our economic engine?
Answer: The lifetime value of each customer (gross profit per customer month multiplied by customer lifetime in months.)
4. What are we deeply passionate about?
Answer: Business analysis.
5. If you could pick one and only one ratio – “profit per X” – to systematically increase over time, what “X” would have the greatest and most sustainable impact on your economic engine?
Answer: Profit per customer lifetime or the number of months each customer stays with The Avid Hog.
The Avid Hog will need to make money to sustain itself. But we don’t intend to maximize revenue. We just need to make an adequate profit. So, we don’t want The Avid Hog to be a mass investment newsletter. We want it to be a premium newsletter.
We only want to have a small number of customers. We’ll try our best to keep them satisfied. We think it’s easier to keep a small number of satisfied customers with 100% retention rate than to have many customers with a high churn rate.
That’s because of our absolute focus on quality. Each report is one month of effort of 2 analysts. We do in-depth business analysis. We try to back up our thesis with facts, quotes, and data. We only issue reports on companies that we think will outperform the market over a 3 to 5 year time frame.
We try to build The Avid Hog into a long-lasting organization.
That means we must create value for customers. We don’t want customers to buy individual reports. We want customers to think of our offering as a package of 12 ideas a year for $1,200. If they are able to pick even one winner out of those 12 ideas, they’ll make a lot of money.
The Avid Hog will certainly evolve. But our products will always be built around business analysis. That’s our corporate DNA. We know one big thing: Doing business analysis.