Turn Cost Centers into Profit Centers
Own the services you already pay for and sell them to others.
- Difficulty
- Advanced
- Time to result
- ~months to results
- Steps
- 4
- Confidence
- 88%
This mental model, inspired by Amazon Web Services, turns recurring expenses into owned businesses. Bezos built enormous compute infrastructure as a cost center, then rented it out, creating a hundreds-of-billions profit center. Bloom applies a micro version: he scans his own P&L for services he pays for monthly, then partners with or productizes the best vendors so he owns the business and drives leads to it via his media platform. The result is a holding company of profitable, largely bootstrapped businesses that send monthly distributions back to reinvest. A related principle is investing in vendors and products you personally love.
Origin
Bloom came across the AWS case study around 2018-2019 and asked whether a micro version applied to his own world. His first example was the back-end team managing his newsletter, which he partnered with (alongside Kit's founder) to build a profitable newsletter-operations business serving other large writers.
Core principles
- 01Recurring monthly expenses can become businesses you own.
- 02Read your own P&L to find candidate cost centers.
- 03Invest via your platform and distribution, not only cash.
- 04Invest in vendors and products you already love and use.
How to run it
- 1
Scan your P&L
Look at what you spend money on every month and flag recurring cost centers that could be owned instead.
- 2
Find an excellent vendor
Identify the vendor or freelancer already doing that work well for you.
- 3
Productize and partner
Turn the service into a real business by partnering, seeding, or acquiring so you have ownership.
Pro tip You can invest with a mix of cash and your platform's lead-generation rather than pure capital.
- 4
Drive your own leads in
Use your media platform and audience to funnel customers to the business, making your distribution the edge.
Pro tip Continue paying the business for your own service so it stays a real customer relationship.
In the wild
Bloom paid a team to run his newsletter's lead magnets, ads, and funnels, then partnered with them and Kit's founder to productize it into a service for other large newsletter writers.
→ A cost center for him became a very profitable business serving some of the world's largest newsletter writers.
Bloom cites investor Peter Lynch buying Hanes after his wife raved about their pantyhose from CVS, investing in a product he could see people loved.
→ Lynch reportedly made roughly a 100x return, illustrating investing in things you uniquely love.
Common mistakes
Ignoring your own P&L
Treating monthly spend as fixed overhead means missing that several line items could be businesses you own.
Assuming you need only cash
Overlooking that platform distribution is itself a form of investment leaves your biggest edge unused.
Is it for you?
Best for
Creators and operators with distribution who spend consistently on outsourced services.
Not ideal for
Early founders with no platform, cash flow, or recurring vendor spend to leverage.
From the transcript
“turn my cost centers into profit centers.”
“I can drive a lot of leads to these businesses via my platform. That is a form of investment.”
From the episode
Sahil Bloom: The 5 Types of Wealth You Need to Design Your Dream Life
Sahil Bloom