Tobacco.
Altria’s operating margin was about 25 percent in 2008 and has run in the low-to-mid 40s for the past several years, near 43 percent in 2025, while Philip Morris International has held operating margins around 33–41 percent over the past several decades. When volumes fell, price increases more than replaced them. Free-cash-flow margins at the majors have commonly sat above 25 percent. The industry tend to not need not need a boom in consumer confidence to stay profitable.
Credit ratings.
Moody’s operating margin was 43 percent in 2008 and 38 percent in 2009; it has been in the mid-30s to mid-40s in most years since, and 43 percent in 2025, with free-cash-flow margins around 30–35 percent. S&P Global’s operating margin was above 40 percent in four of the last five fiscal years and its free-cash-flow margin was 36 percent in 2025. The oligopoly has had essentially zero bankrupcies.
Card networks.
Visa’s operating margin has sat between roughly 57 and 69 percent in recent fiscal years, and Mastercard’s has been in the same band. Both convert a comparable share of revenue into free cash flow. Deep recessions occasionally cut volumes; but the margin structures remain untouched. Earnings have historically kept growing through ordinary recessions. Capital expenditure is trivial relative to sales. Scale is global: the two networks sit on the majority of card spend outside China.
What is the lesson for prospective entrepreneurs?
Aim for an unavoidable ‘transaction’. Aim to take a fee on that transaction. Aim for a model where incremental capital to serve the net customer is little to none. how little capital is required to serve the next unit. Start from the ideal of a highway “toll-booth” business and adjust from there.