- McDonalds is a real estate company
- General Electric is really a bank
- Harvard University is really a hedge fund
- Lebron James is actually an advertising spokesperson
Are the twisted examples above really how we categorize companies/celebrities?
It makes no sense to categorize McDonalds as a real estate company because its cost structure, hiring policies, marketing efforts, and everything else about the company in no way reflect the components of a traditional marketing company.
If "LeBron James" was a publicly traded company and you categorized him as an advertising spokesperson, would you then take him out of the gym and have him spend 4 years pursing an MBA?
No. Neither would the shareholders. Also, he's a lot more successful than a lot of MBAs. The whole point is that maybe the preconceived notions and categorizations aren't all there is to it.
I find this interesting. Are McDonalds making most of their revenue from real estate rents from their franchisees and/or those involved in their supply chain, or is the bulk of this land outside their hamburger business?
Dollars wise McDonalds does make more in rent than in selling food (by about 2x).
It doesn't necessarily mean that.
It's more common to associate "X" with their business competency.
If we always insist on X to be only defined by revenue, we then get the following type of soundbites that we pat ourselves on the back for:
- McDonalds is actually a real estate company and not a hamburger company because they make more money from rent than from food
- General Electric is really a bank because GE Capital has higher revenue than GE Aviation or GE Energy
- Harvard University is really a hedge fund and not a school because the endowment income is greater than the tuition paid by students
- Lebron James is actually an advertising spokesperson instead of a basketball player because he gets most of his money from corporate endorsements instead of the NBA player contract. Same thing can be said for NASCAR drivers and Olympic athletes.
Are the twisted examples above really how we categorize companies/celebrities? We don't label NY Times, National Geographic, and NBC/CBS/ABC/Fox as "ad companies". Instead we respectively call them "newspaper", "magazine", and "tv networks". Being a conduit for ads does not define each of them as an ad company.
It's much more reasonable to think of Google Inc as a AI/search/maps/cloud company that happens to get most of their revenue from ads. They are not an "ad company".
We don't compare McDonalds with Donald Trump development properties. We compare McDonalds with Burger King. We also don't compare Google Inc with Omnicom Group; instead we compare Google Search with MS Bing, and Android vs iPhone, and other technologies.