160 Substack Founders Have Become Operating Founders
The Operating Founder Program is a weekly live Zoom cohort where we take exactly this kind of thinking — academic rigor meets real-world operations — and apply it directly to your business. Strategy, systems, decision-making, and the occasional dark joke about spreadsheets.
Here’s what’s happening right now. On March 9th, we’re launching the Operating Founder Skool community — a private space for ongoing discussion, resource sharing, and direct access between sessions. A full year of membership is included free for the next 40 people who sign up for the Operating Founder program before February 28th.
60 seats are already gone. 40 left. The math is not complicated.
Once these fill, the Operating Founder offer disappears forever.
In 1937, a 27-year-old British economist named Ronald Coase asked a seemingly “stupid” question:
Why do companies exist?
Seriously. If markets are so efficient, if you can just buy anything from anyone, why would you ever bother hiring people, renting office space, and dealing with HR?
Why not just contract everything out?
Coase’s answer was elegant. Companies exist because markets have friction.
Finding vendors takes time.
Negotiating contracts is exhausting.
Monitoring quality from the outside is a nightmare.
If you’re especially interested in the economics and history of all of this, here’s a link to a set of articles that cover everything you’d ever want to know from Oxford University.
Here’s why this matters to you:
Every solopreneur, first-time founder, and small business operator makes transaction cost decisions dozens of times a week.
You just don’t call them that:
You call them “should I learn Canva or hire a designer?”
You call them “do I need an employee or a contractor?”
You call them “is this AI tool actually saving me time or am I spending three hours prompt-engineering something a freelancer could do in forty minutes?”
Coase and Williamson gave us the cheat code.
The decision comes down to three variables:
Frequency. How often do you need this done? If it’s once, buy it. If it’s daily, the calculus changes fast.
Uncertainty. How hard is it to specify exactly what you want? The vaguer the task, the more expensive it gets to outsource — because you’ll pay in revisions, miscommunication, and quiet resentment.
Asset specificity. Does this task require knowledge that’s unique to your business? If someone needs to deeply understand your brand, your customers, your weird little niche — that’s high asset specificity. And that’s where outsourcing falls apart.
When I was scaling my family’s industrial distribution business, every growth phase forced these tradeoffs. At $27M, we outsourced things that made no sense to outsource at $35M. The same truth held at $43M and $53M.
The transaction costs shifted as the company changed.
They always do.
The mistake most small operators make is treating this as a vibes-based decision. “I feel like I should hire someone.”
Cool. Feelings are not a framework.
Map the frequency. Assess the uncertainty. Measure the specificity.
Coase figured this out almost ninety years ago.
Pretty wild. I can’t think of anything I’ve figured out thus far that could be reasonably expected to apply ninety years from now. How about you?
Hope this helps.
- j -
I built something to help you.
The Coase Code is a free 12-prompt toolkit — the exact prompts I use, built on what I learned studying economics at Harvard and the University of Chicago — to run transaction cost analysis on your own business.
Three tiers. Understand the theory. Diagnose your operations. Build a decision framework you’ll actually use every quarter.
Become a paid subscriber to access all the content ($7.99 / month) or get to work with us and become a member of the Operating Founder cohort for $99 (annual).
John Brewton documents the history and future of operating companies at Operating by John Brewton. He is a graduate of Harvard University and began his career as a Phd. student in economics at the University of Chicago. After selling his family’s B2B industrial distribution company in 2021, he has been helping business owners, founders and investors optimize their operations ever since. He is the founder of 6A East Partners, a research and advisory firm asking the question: What is the future of companies? He still cringes at his early LinkedIn posts and loves making content each and everyday, despite the protestations of his beloved wife, Fabiola, at times.
what resonated most is the point that the answer changes as you scale. a $1M business and a $50M business should not make the same build vs buy decisions, even for the same function
what resonated most is the point that the answer changes as you scale. a $1M business and a $50M business should not make the same build vs buy decisions, even for the same function