Why a $20M Business Can Beat a $100M Business 💰 (The Gross Margin Secret)

Added: 2026-05-31

[00:00:00]Now, the second thing that I see is like a a big advantage is expensive. In a perfect world, you'd want something that costs a penny that you could sell for a buck. High gross margins means that you can pay people better, your cash conversion cycle is typically faster, you can reinvest that cash in more growth, and this typically has higher EBITDA margins. So, if you have high gross margin, you'll typically have higher net margins. And so, for example, if I had a hundred million dollar revenue business with ten percent margins versus a twenty million dollar business with fifty percent margins, you'd make the same money at the end.

[00:00:28]Now, you get five times the incremental EBITDA per dollar made, and that's certainly nice. It's less work for more money.