Mike AndesFounder, Augusta Lawn Care and Homeworks · Founder of Homeworks and Augusta Lawn Care

The Best Part of Entrepreneurship!

11 Feb 2025 · 1 min

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1:04

Mike Andes argues that the best part of entrepreneurship is building enterprise value, which recurring revenue streams (subscriptions) enable. He contrasts businesses that require constant new jobs and long hours with those that generate recurring revenue, explaining that recurring services increase a company's sellable value. He illustrates this with Apple: although iPhone unit sales were similar over a decade, Apple's stock price rose over tenfold because Apple added subscription services (AppleCare, iCloud) whose revenue now exceeds combined hardware categories.

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You have to work 12, 14, 16 hours a day, and you're constantly on this treadmill of getting new jobs. Your business is worth nothing because if you were to sell it to someone else, they have no promise of more work in the future. You're constantly trying to get the next job. Now, the reason I say that recurring revenue builds wealth is because I look at wealth as the enterprise value of the business. To me, the best part about being an entrepreneur is being able to build enterprise value in my business. Or in other words, the amount of money I could sell the business for without paying taxes on that increase in equity. Now, to exemplify this, let's actually look at Apple. Apple 10 years ago was selling about the same number of iPhones as they do today. But yet in the past 10 years, their stock price has more than 10x. So why? Why is that? Because they've started to add services like Apple Care, like icloud. These are subscription services. And the revenue is slowly increased all the way to the point now where Apple's services makes more revenue than all of the Macs, iPads, Apple Watches, AirPods, and wearables. All of those combined make up less revenue than just the services that Apple sells.