To be fair… the article explicitly states that certain decisions can make operating a startup harder than it needs to be… not that it’s impossible.

Your example is a good example of where targeting price sensitive customers might be beneficial. But it’s also worth pointing out the challenge of running an operation like Walmart. Because they’re competing on price, they’re always having to be wary of other companies (like Amazon) coming into their market and undercutting them. That’s a significant challenge, especially since price-sensitive customers don’t tend to have much brand loyalty. In other words, at the end of the day, if Amazon can provide something for cheaper than Walmart, customers are going to use Amazon.

That’s a difficult business to defend. Walmart has an easier time doing it because of the company’s immense scale, but if you were to start a new company that takes the same approach — which is the argument in this article — you’d likely fail because you don’t have the same economies of scale to work with.

Aaron Dinin, PhD

I teach entrepreneurship at Duke. Software Engineer. PhD in English. I write about the mistakes entrepreneurs make since I’ve made plenty. More @