I think a fun running series would be something like: What's that business's actual "business"? EG: Airlines don't make money by flying ppl around. The profits come from credit cards. What are other industries whose profit center would surprise most people?
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Aug 8, 2025 · 1:30 PM UTC

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Replying to @DKThomp
McDonalds is a landlord. Costco and Amazon are membership clubs that break even on retail. Starbucks is mostly a bank/rewards program. Car dealerships make their profits on financing and servicing. Most companies are just creative ways to invest the floating cash.
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Replying to @DKThomp
As an industry, insurance companies lose money on underwriting (premiums vs. payouts), but exist bc they get to invest, & retain profits from, the float. (Buffett's letters are particularly good on this topic)
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Replying to @DKThomp @lymanstoneky
margins on groceries are so slim that half of Kroger's profits come from their data division
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Replying to @DKThomp
The business of Apple is arguably blue bubbles and cloud photos.
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A lot of this came out in the DOGE work. ie, "Politico" is selling customer service management software, not politics news. Lots of people still surprised that Ivy League colleges are basically hedge funds/research centers, and not tuition funded.
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Replying to @DKThomp
Airlines wouldn’t make money from credit card stuff if they weren’t also airlines. It is their business IMO, even if it is fun to say otherwise
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Replying to @DKThomp
Google is an advertising company that makes technology. Domino’s is a technology company that makes pizza. Palantir is a consultancy that has productized AI.
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Replying to @DKThomp
wow this is actually very interesting, some cool results here
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Replying to @DKThomp
This is a fairly common description but I don’t think it is accurate. Consider an airline with material international operations, charging single digit percentage points of flights in JPY. “It loses money on Americans; good thing it has the Japan business to keep it afloat.”
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Replying to @DKThomp
This is old but kind of the perfect example, McDonald's primarily makes money from leasing land to franchisees
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Replying to @DKThomp
The points have value because you can spend them on the airlines flying you around! It's still the same core business in each case, just with two different market approaches.
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Replying to @DKThomp
I feel like you and @patio11 would have an absolutely fascinating conversation and I would pay money to see that
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Replying to @DKThomp
Most mining companies say they operate and produce commodities. That's really just the loss-leader to get to the real profit center: Share issuance.
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Replying to @DKThomp
classic is gas stations and movie theaters making more on the snacks than the titular good
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Replying to @DKThomp
car dealerships sell loans
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Average person probably doesn't know that Amazon is more AWS than Amazon Dot Com.
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Replying to @DKThomp
Movie theatres: most profit comes from concessions; movies themselves are break even
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Replying to @DKThomp
This would make a great podcast miniseries IMO.
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Replying to @DKThomp
Gyms don't sell "fitness" they sell memberships. They are banking on you not coming to the gym. They sell WAY more memberships than they actually have the space to accommodate patrons.
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Replying to @DKThomp
Two sided markets in general--credit cards, print media, etc.
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Replying to @DKThomp
It is a reflection of accounting choices as much as of the actual strength of either business. There are tax, jurisdiction, labor relations, financial, and even bankruptcy considerations to why you’d want to allocate costs and revenue one way or another.
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Replying to @DKThomp
My mom used to work for Jared (a jewelry store chain). They primarily made money off of being a bank (financing for the purchases)
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Replying to @DKThomp
Car dealers don't make money selling cars; they make money fixing them.
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Replying to @DKThomp
Starbucks is a bank
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Replying to @DKThomp
Movie theaters make money on the soda and snacks, restaurants on the drinks, and Ray Dalio makes sub-par investment but has a great social networking events business.
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Replying to @DKThomp
Rental car companies sell overpriced car insurance and gasoline. The cars themselves are an afterthought.
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Replying to @DKThomp
McDonald's is famously a real estate business, not a hamburger business
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Replying to @DKThomp
Asian supermarkets in the U.S.: business model is not from selling groceries, but from monetizing foot traffic and renting out the other stores in the strip mall. Costco: most if not all of its profit is from selling membership fees. Hong Kong MTRC: makes profit from selling and leasing real estate supported by the foot traffic it generates, not solely from subway fares.
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Replying to @DKThomp
BLADE lost money shuttling people between airports and Manhattan, made money transporting human organs.
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Replying to @DKThomp
Many but not all of these markets are two-part tariff business models. This is a good article on how it still works even in competitive markets. DM if you need a PDF. academic.oup.com/qje/article…

Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets*

Abstract. Bayesian consumers infer that hidden add-on prices (e.g., the cost of ink for a printer) are likely to be high prices. If consumers are Bayesian,

academic.oup.com
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Replying to @DKThomp
This is like how Macy’s and Nieman Marcus essentially make their profits on store credit cards
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Replying to @DKThomp
"You're not in the hamburger business. You're in the real estate business."
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Replying to @DKThomp
Sony makes more money from financial services in Japan than they do making electronics
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Replying to @DKThomp
McDonald's is the classic case. They make their money as a landlord.
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