UK Engineering Cost Advantage
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A Scottish software company (Petroleum Exports/PetEx) built a highly profitable business by creating specialized software for oil and gas operations, leveraging UK-based talent while serving global enterprise customers at premium prices.
Key Points:
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Business Model:
- Specialized software for oil and gas operations
- Only 420 enterprise customers
- Charges $300,000 per year per license
- Started as consulting, pivoted to software
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Financial Performance:
- $100M in annual revenue
- $67M in profit
- $60M paid in dividends to owner
- $911,000 revenue per employee
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Cost Structure Advantage:
- 86 total employees
- Average cost per employee: £101,000 ($125,000)
- Based in Aberdeen, Scotland - leveraging lower UK engineering salaries
- Low operating costs allow for high profit margins
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Product Strategy:
- Highly technical specialist software
- Mission-critical for oil/gas operations
- Strong pricing power due to customer dependence
- Price increases easily accepted due to relative cost vs. oil operations
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Customer Lock-in:
- Customers won't switch over small price differences
- Software is crucial for operations
- High switching costs
- Deep integration into customer workflows
Sam Parr
Host of MFM and fitness influencer
Sam Parr is a serial entrepreneur and business media pioneer.
In 2016, he founded The Hustle, a business news media company that started in his kitchen with just $12 and grew to eight figures in revenue.
Sam led the charge in making newsletters popular when few believed in their potential.
After four successful years, he sold The Hustle to HubSpot, a publicly traded company. Now operating as HubSpot Media, The Hustle reaches 3 million readers daily, employs a team of nearly 100, and has been the launchpad for dozens of its staff to found their own media companies and newsletters.
Sam remains the host of the popular business podcast, My First Million, and continues to start and sell companies. He also co-founded Hampton, a highly vetted community for entrepreneurs, founders, and CEOs, and teaches people to write better through his platform, Copy That.