Rosenthal: Learning Curve Pricing Requires Early Unprofitable Aggressive Pricing
David Rosenthal · TSMC founder Morris Chang · Acquired · Jan 27, 2025 · at 2:38:03
Acquired co-host David Rosenthal breaks down the Boston Consulting Group learning curve framework developed with Morris Chang at Texas Instruments.
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“The insight is that like the goal that you are playing for is to be the largest volume player kind of at the end of the game. So if you take that as a given of like, if we get to be the largest volume player, this is a fixed cost business. This is a scale economies business. We can spread that fixed costs over the maximum number of customers. How do we get to the maximum number of customers in the early stages of the game where it's more competitive? We accelerate the pricing to where we think it will get to at the end of the game. So that's why doing these price cuts and also starting low with your prices, like you can even start unprofitable with your prices in the early days in a given node generation because the goal is crowd out the competition, become the industry dominant number one player, get all the customers.”
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