Margin Creep

This is the guy who creeps around the perimeter of your yard, always wondering what brand of mower you're using to get your grass trimmed so neatly.

It's also the notion that profit margins tend to creep downward. That is, companies pioneer a product and have the world begging for more (think: early iPhones). There's no competition at that point, and as the company that's pioneering it is the first to reach scale economies, it has nice fat margins to fund future growth and development.

But then competition comes in and prices have to be ratcheted down a bit to compete. So everything suffers downward margin, and profit margins creep downward.

The same notion applies to overhead. Like, how many beautiful statues do you see in the lobbies of Silicon Valley startups? Yeah, between zero and none. But go to a well-heeled old company like IBM or GE or Bank of America, and wow, those corporate offices are gorgeous. You can bet that the founders of those companies were way more sensitive to profit margins than are the big fat corporate leaders of today...so their operating margins again suffer downward pressure.

And yes, margins can creep in the other direction. Think: Microsoft Windows back in the day. The company had something like 90% gross and 45% operating margins, margins which crept upward from half those numbers a decade earlier.