Should a company deliberately run a core product at zero or negative margin as a loss-leading front door?

Hugo Barra · Nov 9, 2022

Xiaomi's business model — very good phones sold direct to consumers online with no middleman, no marketing spend, thin hardware margins made up by software revenue — was new to the industry and really worked

It let them challenge Samsung and Apple on price while making money elsewhere, and the recipe exported to ~20 markets where they became #1 or #2

Scope: excluding the US market for the global ranking

8:56 20 Product: Hugo Barra on Lessons Building Hardware Products at Android, Xiaomi, Oculus, and Detect; Feature Kings vs. Budget Kings; 996 Work Culture in China; There Are No MVPs in Hardware; The 3.5-Hour Recruiting Interview

Andrew Dudum · Apr 4, 2026

Comprehensive blood panels including genetic and polygenic risk scores should be given away free as part of a membership, serving as a preventative front door

Vertically owning the at-home collection device, lab processing and fulfillment drives the cost to near zero versus $300–$2,000 at existing providers, and the information lets people act preventatively

Scope: requires hundreds of millions of dollars of investment to verticalize; currently in progress, not yet reality

39:31 20VC: Hims & Hers: $4.3BN Market Cap on $2.3BN of Revenue: The Comeback | Why Being Public is 10x Better | The Death of the "Strategy" Hire | Why Performance Marketing is Worse than Brand Marketing with Andrew Dudum

Andrew Dudum · Apr 4, 2026

Lab testing is Hims' least profitable but most important product and should permanently stay near zero margin

The loss-leader value to the patient is more important; as verticalization reduces cost, Hims will pass savings to consumers rather than take margin

46:06 20VC: Hims & Hers: $4.3BN Market Cap on $2.3BN of Revenue: The Comeback | Why Being Public is 10x Better | The Death of the "Strategy" Hire | Why Performance Marketing is Worse than Brand Marketing with Andrew Dudum

Parker Conrad · Oct 3, 2022

Payroll is structurally a much lower-margin product and has to be subsidized by margin from the other products sold around it

The support burden on payroll is much higher, even though it is the core of what the company does

Scope: Rippling targets 70-80% software margins on other products

21:20 20VC: Rippling's Parker Conrad on The Four Main Benefits From Building a Compound Startup | Why There Should Never Be a Trade-Off Between Speed and Quality | How Zenefits Gave Parker a Chip on the Shoulder and Why That is so Important?

Harry Stebbings · Apr 4, 2026

In a multiproduct company, not every product line has to be profitable

41:22 20VC: Hims & Hers: $4.3BN Market Cap on $2.3BN of Revenue: The Comeback | Why Being Public is 10x Better | The Death of the "Strategy" Hire | Why Performance Marketing is Worse than Brand Marketing with Andrew Dudum