In Episode 5 of The Mike Ye Briefing, I look at one of the most dangerous patterns in business: dependency that hides inside growth. Revenue can be rising. Traffic can be increasing. Customers can be coming in. But if someone else controls the platform, the distribution, the pricing, the customer relationship, or even the assumptions behind the business model, that growth may be more fragile than it looks. I share examples from a recipe website facing AI search disruption, Long Beach Surgical and payer economics, Sourcing Journal and founder dependency, La Senza and the missed opportunity to serve a broader range of women, and Express, where we exited as growth plateaued and fast fashion was beginning to reshape retail. The lesson is not that dependency is always bad. Almost every business depends on something. The real questions are: Who controls what is making you successful? What happens if the terms change? And are you using that relationship as leverage — or becoming owned by it? Because sometimes growth creates leverage. And sometimes growth creates more dependency.
Welcome to The Mike Ye Briefing.
I’m Mike Ye.
This is Episode 5.
Dependency Often Looks Like Growth.
One of the most dangerous things about dependency is that it does not always feel dangerous.
Sometimes it feels great.
Revenue is growing.
Traffic is increasing.
Customers are coming in.
The phones are ringing.
The team is hiring.
The business looks healthier than it did a year ago.
So naturally, the owner thinks:
We are doing well.
And maybe they are.
But there is another question I like to ask.
Who controls what is making you successful?
That question can change the entire way you look at a business.
I will give you an example.
In Episode 2, I talked about the owner of a cooking recipe website who asked me about selling.
For years, the business model worked very well.
Publish useful recipes.
Rank high in search.
People search for something they want to cook.
They click.
They visit the website.
The website earns advertising revenue.
More content creates more traffic.
More traffic creates more revenue.
From the outside, that looks like a wonderful growth loop.
And for a long time, it was.
But somewhere inside that growth was another reality.
The website did not control the front door.
Search did.
If most of your visitors arrive because another company decides where you rank, then part of your success depends on rules you do not control.
That dependency may not matter when everything is working.
In fact, it can feel like leverage.
Google has billions of users.
You do not have to build your own search engine.
You create content, Google sends people to you, and everybody benefits.
That is a very powerful relationship.
Until the relationship changes.
Now AI search can answer many questions directly.
Someone wants to know how long to roast a chicken.
They may ask an AI.
Someone wants a recipe for fried rice.
They may ask an AI.
Someone wants to know what temperature to bake salmon.
They may never visit a website at all.
The recipe did not become worse.
The owner did not suddenly become less talented.
The archive of content did not disappear.
What changed was the distribution layer between the audience and the business.
That is dependency.
And this is what makes dependency difficult.
The growth was real.
The traffic was real.
The revenue was real.
But control was somewhere else.
So when the owner asks me:
Should I sell?
I am not only thinking about what the business earned last year.
I am thinking:
How much of those earnings are attached to something the owner actually controls?
Does the business own an audience?
Does it have an email list?
Does it have a recognizable brand?
Do people go directly to the site?
Does it have products?
Subscriptions?
Video?
Licensing?
A community?
Something that gives the owner a relationship with the customer that does not disappear if somebody changes an algorithm?
That is the distinction I care about.
Not growth versus no growth.
Dependency versus leverage.
Those are not the same thing.
And dependency is not automatically bad.
Almost every business depends on somebody.
A restaurant depends on suppliers.
A manufacturer depends on customers.
A retailer may depend on a landlord.
A software company may depend on a cloud provider.
A creator may depend on YouTube, Instagram, TikTok, or Spotify.
A publisher may depend on Google.
A marketplace seller may depend on Amazon.
A doctor depends on reimbursement.
A business owner may depend on one salesperson who controls the major relationships.
Dependency is everywhere.
The question is not whether dependency exists.
The question is:
Who controls the relationship?
How much power do they have?
What happens if the terms change?
And what options do you have when they do?
That is where leverage begins.
I saw this very clearly with Long Beach Surgical Center.
On the surface, it was a successful outpatient surgical center.
Doctors were performing procedures.
Patients were coming through.
The center generated earnings.
Nothing was obviously broken.
But when we looked at the economics, one thing became very clear.
The center was being reimbursed like a smaller independent facility.
Same doctors.
Same procedures.
Same patients.
But the economics were influenced by something the center could not fully control.
Payer reimbursement.
That was structural dependency.
The center could become more efficient.
The surgeons could work harder.
The staff could schedule more carefully.
But there was a limit to how much those actions could change the underlying reimbursement structure.
So our acquisition thesis was not simply:
Let’s buy a profitable surgical center.
The more important question was:
What changes if we put this center inside a stronger institutional structure?
With SCA affiliation, the center had more leverage with reimbursement.
We expanded specialties.
We diversified the physician base.
And, as I discussed in the last episode, we made sure the most productive surgeons had shares in the center.
Their success became our success.
And our success became theirs.
That changed the structure.
Before, the center depended on an environment it had limited ability to influence.
After the transaction, institutional affiliation and physician alignment gave the business more leverage.
The procedures did not suddenly become different.
The building did not magically become more valuable overnight.
The structure around the business became stronger.
That is an important idea.
Sometimes the best way to improve a business is not simply to make it bigger.
It is to change what the business depends on.
I learned another version of this during my years in retail.
When we acquired La Senza, one of the strategic goals was to bring a younger customer into the broader Victoria’s Secret ecosystem and expand our presence in North America.
At the time, that made sense.
La Senza had a younger customer.
It had stores.
It gave us another brand and another way to reach women.
We were thinking about growth.
More customers.
More stores.
More geographic reach.
But looking back, there was another lens we did not fully appreciate.
The definition of the customer itself.
Victoria’s Secret had built an incredibly powerful brand.
But the brand also had a fairly specific view of the woman it was serving.
Certain sizes.
Certain shapes.
A certain image.
For a long time, that focus worked.
The company grew.
The brand became iconic.
But growth can hide a different kind of dependency.
Sometimes a business becomes dependent on its own definition of the customer.
If your success is built around serving a narrow audience extremely well, that can be a tremendous strength.
Until the market around you expands and your definition does not.
We had focused on bringing in a younger customer through La Senza.
But the bigger opportunity was not only age.
It was inclusivity.
More sizes.
More shapes.
More women.
A broader definition of who the customer could be.
That was a lens we missed.
And over time, Victoria’s Secret growth plateaued.
The market was changing.
Women wanted to see themselves represented differently.
New competitors understood that.
The potential audience was larger than the one we had defined for ourselves.
That taught me another lesson about dependency.
A company can become dependent not only on another platform, another customer, or another supplier.
It can become dependent on its own assumptions.
Assumptions about who the customer is.
Assumptions about what the customer wants.
Assumptions about why the business succeeded in the first place.
Those assumptions can be especially dangerous because no outside company has to change the rules.
The market simply moves.
And you stay where you are.
I think founders sometimes miss this because growth is so easy to celebrate.
We measure revenue.
We measure users.
We measure traffic.
We measure subscribers.
We measure followers.
We measure customers.
Those numbers are visible.
Dependency is often invisible.
Imagine a company that grows from one million dollars of revenue to ten million dollars.
That sounds fantastic.
But then you learn that eight million dollars comes from one customer.
Did the company become ten times stronger?
Maybe.
Or did it become much more dependent?
Both things can be true at the same time.
The company grew.
And the risk grew with it.
Now imagine a creator who has ten million followers on a social platform.
That sounds like tremendous distribution.
And it is.
But if the platform changes the algorithm tomorrow and the creator can suddenly reach only a small percentage of those people, how much of that audience did the creator really own?
Again, I am not saying the audience has no value.
It clearly does.
I am asking a different question.
Where does the control sit?
This is a question buyers ask all the time.
A seller says:
“We grew thirty percent last year.”
The buyer asks:
Where did the growth come from?
One customer?
One platform?
One product?
One salesperson?
One geography?
One channel?
One contract?
One customer demographic?
One assumption about the market that may no longer hold?
Growth tells me something happened.
Dependency tells me whether I should trust that it can continue.
That distinction matters enormously in M&A.
Because buyers are not only buying the last twelve months.
They are underwriting the next several years.
If the growth depends on something outside the company’s control, a buyer is going to think about that.
Maybe the customer concentration is acceptable because the contract is long-term.
Maybe the platform dependency is acceptable because the company has extraordinary brand loyalty.
Maybe the founder dependency is manageable because there is a multi-year transition.
Maybe the supplier dependency is acceptable because the supplier relationship is protected.
Maybe a narrow customer definition is acceptable because that niche is still expanding.
Dependency does not mean the business is unbuyable.
It means the dependency has to be understood.
This is why structure matters so much.
In Episode 4, I talked about Sourcing Journal.
When we acquired the business, Eddie Hertzman was deeply connected to almost everything.
The relationships.
The customers.
The editorial identity.
The events.
The industry.
If you simply looked at that dependency and said:
Founder dependency is bad.
You would miss the point.
Eddie was also a major reason the business was valuable.
The answer was not:
We need Eddie out of the business immediately.
The answer was:
How do we make sure the value connected to Eddie transfers successfully?
So we created a multi-year earnout.
That gave the transition time.
It aligned his economic interests with ours.
And it allowed the business to become part of a larger organization without pretending that Eddie’s importance disappeared on closing day.
That is a good example of turning dependency into something closer to leverage.
You acknowledge reality.
Then you structure around it.
The same principle applied to the surgeons at Long Beach Surgical Center.
If the center depends on productive surgeons, pretending otherwise is foolish.
The smarter move is to align them.
Give them ownership.
Now the people the business depends on also benefit when the business succeeds.
That is much stronger than simply hoping they remain loyal.
I like loyalty.
I believe relationships matter.
But if I am investing real money into a business, I also like alignment.
Those are different things.
This pattern shows up in media constantly.
For years, publishers benefited enormously from outside distribution.
Search.
Facebook.
Twitter.
YouTube.
Every new platform could create another way to reach an audience.
That helped media companies grow.
But it also created a temptation.
Why spend money building direct relationships when somebody else can deliver millions of people to you?
That works until the economics change.
The platform changes the algorithm.
Referral traffic changes.
Advertising economics change.
A new technology changes how people discover information.
Suddenly, what looked like free distribution reveals itself as dependency.
I have watched this happen repeatedly throughout my career in media.
And now AI is creating another version of the same question.
If an AI system reads your information and answers the user directly, where does value accrue?
Does the publisher still receive the visit?
Does the creator still own the relationship?
Does the brand remain visible?
Does the source receive economic value?
Nobody knows exactly how all of this will settle.
But the dependency question is already here.
That is why I think brands matter.
Direct audiences matter.
Authority matters.
Community matters.
Email lists matter.
Subscriptions matter.
Events matter.
Products matter.
Anything that strengthens the direct relationship between a business and the person it serves can reduce dependency on somebody else controlling the introduction.
This is also why I became interested in cash-flow businesses.
Take a laundromat.
It is almost the opposite of the recipe website.
Nobody is asking an AI to wash their clothes.
The customer has a physical need.
They need access to machines.
They need a convenient location.
They need the equipment to work.
That does not mean a laundromat has no dependencies.
Of course it does.
Utility costs.
The lease.
Equipment.
Local competition.
Demographics.
If the owner does not own the building, the lease may be one of the most important dependencies in the entire business.
Imagine buying a wonderful laundromat with years of steady cash flow.
Then discovering the lease expires in two years and the landlord can dramatically increase the rent.
The revenue did not change.
The customer base did not change.
But the owner does not control one of the most important inputs into the economics.
That matters.
This is one of the reasons I built CashFlowRoutes.com.
I became interested in understanding how ordinary cash-generating businesses work.
Not because laundromats or car washes or local service businesses are somehow immune to risk.
They are not.
But the dependency structure is different.
And once you understand the dependency structure, you understand the business much better.
That is really what this framework is about.
I call it Dependency versus Leverage.
Dependency is when your success relies on another party, another structure, or even another assumption whose change can materially affect your economics, access, or ability to operate.
Leverage is different.
Leverage is when another party’s scale, another asset, or another structure helps you while you still retain meaningful control or optionality.
The difference can be subtle.
Imagine two businesses using the same social platform.
Business A gets ninety percent of its customers from that platform.
It has no email list.
No direct traffic.
No meaningful brand search.
No customer relationship outside the platform.
If the platform changes, Business A has a serious problem.
Business B also uses the platform.
It gets tremendous reach there.
But every customer is encouraged to join the company’s own community.
The company collects email addresses.
Customers buy directly.
People search for the brand by name.
The company has several distribution channels.
Same platform.
Very different dependency.
Business B is using the platform as leverage.
Business A may be owned by it.
That is the difference.
One of the easiest ways to fool yourself is to mistake borrowed distribution for owned demand.
Or a narrow customer definition for permanent market truth.
They can look perfectly healthy when everything is going well.
The distinction becomes obvious when something changes.
This is also why I do not like looking at growth in isolation.
If a company tells me revenue doubled, I want to understand what else doubled.
Did customer concentration double?
Did ad spending double?
Did platform dependence double?
Did working capital requirements double?
Did the founder’s workload double?
Did one salesperson become responsible for most of the new business?
Did the company give up margin to generate the growth?
Did the market expand while the company continued serving the same narrow customer?
Sometimes growth creates leverage.
Sometimes growth creates more dependency.
You have to look underneath the number.
That is where judgment comes in.
There is another form of dependency that founders often do not recognize.
Themselves.
We talked about this in Episode 4.
A founder can become the biggest dependency inside the company.
Every major relationship runs through them.
Every important decision.
Every sale.
Every negotiation.
Every exception.
The business may be growing beautifully.
But the founder’s workload grows right alongside it.
That can feel like success.
Until the founder wants to sell.
Then the buyer asks:
Who does all of this when you are gone?
Now the growth that once made the founder proud can create a transition problem.
That does not mean the founder did anything wrong.
In many cases, that level of involvement is exactly how the business survived.
But the next stage requires something different.
You have to turn personal capability into institutional capability.
The customer trusts the company, not only the founder.
The team can make decisions.
The process is documented.
The relationships travel.
The knowledge travels.
That is how dependency becomes transferability.
And transferability matters because the more the business can stand on its own, the more options the owner has.
Sell it.
Keep it.
Bring in management.
Take a step back.
Bring in a partner.
Raise capital.
Pass it to the next generation.
Those are options.
Dependency tends to reduce options.
Leverage tends to create them.
That is why I care about this distinction even when there is no sale planned.
A more transferable business is usually also a more resilient business.
A founder should not have to be preparing for an exit to ask these questions.
Ask them while things are going well.
Who controls my customers?
Who controls my distribution?
Who controls my pricing?
Who controls my critical inputs?
Who controls my access to the market?
Which employee would be extremely difficult to lose?
Which platform could change my economics tomorrow?
Which customer could materially hurt the company if they left?
Which relationship exists only because of me?
What assumptions about my customer am I treating as permanent?
What am I calling growth that may actually be increasing my exposure?
Then ask a second set of questions.
What can I own?
Can I own the customer relationship?
Can I diversify distribution?
Can I negotiate longer contracts?
Can I build a stronger brand?
Can I develop management?
Can I align critical employees economically?
Can I convert a platform audience into a direct audience?
Can I reduce dependence on one customer?
Can I serve a broader customer base?
Can I own the real estate?
Can I build proprietary data?
Can I create something scarce?
You do not need to eliminate every dependency.
You probably cannot.
The goal is to understand them before they become obvious to everybody else.
That is the part that matters.
Because dependency is easiest to fix when the relationship is working.
The worst time to renegotiate with your largest customer is after they tell you they are leaving.
The worst time to build direct traffic is after search traffic collapses.
The worst time to expand your customer definition is after competitors have already captured the audience you ignored.
The worst time to build management is after the founder announces retirement.
The worst time to extend the lease is after the landlord realizes you have no alternative.
The worst time to align a key employee is after a competitor recruits them.
Preparation comes earlier.
That is the same idea we started with in Episode 1.
Before consequence arrives.
I saw the importance of this from another angle with Express.
Express was a very different situation from La Senza.
When we divested Express, the timing was nearly perfect.
The business had grown tremendously, but that growth was beginning to plateau.
At the same time, another change was beginning to appear in retail.
Fast fashion.
The traditional fashion cycle was about to be challenged by companies that could identify trends, manufacture quickly, and move new styles into stores much faster.
That change was still early.
It was not yet obvious to everyone how important it would become.
We exited Express at a point when the business still had scale, brand recognition, and value.
The buyer had the opportunity to take that business and adapt it for the next retail cycle.
But after the acquisition, the strategic shift toward fast fashion did not happen quickly enough.
It took roughly a decade to work through that transition.
To me, Express is a good example of why dependency and timing eventually meet.
A business can become dependent on a model that worked extremely well in the past.
Store cadence.
Merchandising cycles.
Supply chains.
Customer expectations.
The danger is not that the model was wrong.
The model may have created enormous value.
The danger is assuming that because it worked yesterday, you have unlimited time to adapt it tomorrow.
That is what makes timing so important.
At La Senza and Victoria’s Secret, we missed part of the customer shift.
At Express, we recognized that the existing growth cycle was reaching a plateau and exited as fast fashion was beginning to reshape the market.
Different decisions.
Different outcomes.
But both taught me the same thing.
Markets do not send you a letter saying:
Your old advantage expires next year.
The signs appear earlier.
The customer changes.
The distribution changes.
The technology changes.
A new competitor emerges.
Growth begins to flatten.
The old model still works, but not quite as well as it used to.
That is the window.
And this is where Dependency versus Leverage begins to connect to our next framework.
Timing Asymmetry.
Because being early does not automatically make a decision smart.
And waiting does not automatically make a decision wrong.
The real question is:
What happens to my options if I wait?
Sometimes waiting creates leverage.
Maybe the business is still accelerating.
Maybe a new product is about to launch.
Maybe the customer base is diversifying.
Maybe the management team is getting stronger.
Maybe another year creates substantially more value.
Then patience may be the right answer.
But sometimes waiting creates the opposite.
Search dependence gets worse.
The market moves toward a customer you are not serving.
Fast fashion gets stronger.
The founder becomes more tired.
The lease gets closer to expiration.
The largest customer becomes more important.
A technology shift becomes obvious to everyone.
Then waiting may quietly reduce your options.
That is timing asymmetry.
With Sourcing Journal, Eddie Hertzman understood something important about the ceiling of the business and the opportunity to become part of a larger platform.
He acted while the company was healthy.
While the brand had authority.
While the business had options.
With Express, we exited while the business still had value and before the next structural change in retail became fully obvious.
Those decisions are very different from waiting until the market forces you to act.
That is what Episode 6 is about.
The Window Opens Before It Is Obvious.
We are going to talk about timing.
How to think about acting early.
When patience creates leverage.
When waiting quietly gives it away.
And why some of the best decisions happen while the old model still appears to be working.
I’m Mike Ye.
This is The Mike Ye Briefing.
And this season is about seeing clearly before consequence arrives.