⚙ Hi {{first_name_tally|Operator}},

Shopping for vendors is like touring apartments. Fresh paint, staged furniture, a landlord who “totally values long-term relationships.”

Then you read the lease and realize the exit clause is written by a Bond villain.

I just lived the operator version of that (nice lobby, brutal fine print).

So we’re talking about vendors as landlords, why “partnership” is marketing, and the three tests I now run before I sign anything.

- Rameel

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January 5, 2024. Alaska Airlines Flight 1282, 16,000 feet above Portland.

A door plug blows off mid-flight.

The cabin depressurizes.

Everyone survives.

Two weeks later, Boeing's CEO stands in front of cameras and admits what the company had known for years: Spirit AeroSystems—the supplier Boeing spun off in 2005 to 'optimize' costs—had been shipping defective fuselages.

Four bolts were missing from the door plug. 

Not loose. Missing.

By July, Boeing paid $4.7 billion to buy Spirit back. Add the $12.5 billion spent propping Spirit up through years of quality failures, the $2 billion in waived claims, the $1 billion in assumed obligations. Nineteen years of efficiency gains, unwound.

Total bill: ~$23 billion.

Every vendor relationship starts the same way: competitive pricing, flexible terms, promises of collaboration.

"Strategic partnership" is the phrase they use.

What they mean is something else entirely—we're your landlord now, and the lease is already signed.

You think you're entering a partnership, but you're signing a rental agreement where the terms favor the landlord, not you.

The pricing looks great until you try to leave, at which point you discover the "flexibility" evaporated after the first renewal and the "partnership" has become a dependency trap where switching costs more than staying.

Your vendor isn't your partner. They're your landlord. And the best operators know which leases are worth signing.

You're one of three tenant types in the vendor economy. The difference determines whether you keep leverage or lose it entirely.

The Smart Tenants rent commodities and maintain escape routes. Nike outsources 100% of manufacturing across 530 facilities in 40 countries. No single supplier can trap them. When quality slips or prices rise, they shift volume. The relationships are deep—90% of suppliers have been with Nike for 15+ years. The dependencies are shallow—no proprietary systems, no custom tooling they can't move.

The Trapped Tenants rent core capabilities and discover too late they can't leave. Boeing outsourced fuselages—the thing that literally holds the plane together. When quality collapsed, they had no alternatives. The switching cost wasn't a line item. It was ~$23 billion.

The Homeowners refuse to rent what matters. Tesla controls 80% of its supply chain—batteries, software, motors, even seats. When the 2020 chip shortage hit, Ford and GM idled factories for months waiting for suppliers. Tesla rewrote firmware for 19 different chip variants and grew production 68% year-over-year.

Homeowners pay more upfront. Tenants pay forever.

Nike doesn't own a single factory. Every shoe, every jersey comes from contractors. If that sounds reckless, you're thinking like Boeing.

Nike knows shoes aren't their edge. Brand is. Design is. Marketing is. Stitching leather to rubber though? That's commodity work any skilled worker can do.

So Nike spreads production: Vietnam (43%), China (28%), Indonesia (25%).

No single landlord gets leverage. When one raises prices, Nike shifts volume. When quality drops, Nike walks.

This is what operational control looks like: the ability to leave without your business collapsing.

Boeing couldn't leave Spirit without planes falling apart. Nike can leave any supplier by Tuesday.

The difference? Nike rents what's replaceable. Boeing rented what kills people if it breaks.

While Boeing was discovering vendor partnerships are fiction, Tesla bet the opposite: own what matters.

The 2020 semiconductor shortage proved who actually had control. Every major automaker—Ford, GM, Toyota—shut down production. Their chip suppliers couldn't deliver, and they couldn't do anything but wait.

Tesla shipped 300,000+ vehicles in Q1 2022, up 68% year-over-year.

How? They controlled the software stack. When chips became scarce, Tesla's engineers rewrote firmware in weeks to work with whatever semiconductors they could find—19 different variants.

Ford couldn't rewrite firmware because they didn't own it. Their suppliers did. So Ford waited while factories sat empty.

Tesla's vertical integration looked expensive in 2019. By 2022, it delivered 15% cost reduction plus the flexibility to navigate supply shocks while competitors bled out.

That's the homeowner advantage: when the foundation cracks, you fix it. When the market shifts, you adapt. When everyone else waits for their landlord, you're already shipping.

Before you sign that vendor contract, run three tests. Skip them and you might pay Boeing's price.

Test 1: What Kills You If It Breaks? Boeing outsourced fuselages. Fuselages determine if planes stay in the air. That's a core competency. Nike outsources stitching. Bad stitching means returns, not deaths. That's a commodity.

Ask: Does this create customer value I can defend? Does this determine whether my product works? Can competitors easily copy this?

If you answer yes to the first two, don't rent it.

Test 2: What's the Real Exit Cost? Not the termination fee—the real cost. Oracle made one company produce 233,089 pages of documentation during an audit just to understand what they owned. Every Salesforce customization is a sunk cost you leave behind. Every employee trained on SAP is knowledge that won't transfer.

Enterprise software migrations run $100,000 to $600,000+. ERP transitions cost 40-60% of the original implementation. Cloud migrations take 18-24 months minimum.

If switching costs exceed 40% of contract value, you're not renting. You're trapped.

Test 3: Can You Run an RFP Tomorrow? Could you credibly threaten to leave? Not theoretically—actually put out an RFP and get three real bids?

If one vendor is more than 25% of category spend, red flag. If you can't name three alternatives who could start Monday, you're already captured.

Boeing couldn't run an RFP for fuselages. No one else could build them at scale. That's how four missing bolts cost $23.8 billion.

Nike rents manufacturing and dominates. Tesla owns batteries and survived the chip shortage. Boeing rented fuselages and nearly killed 177 people.

The pattern isn't "outsourcing bad, ownership good." It's simpler: know what you're renting, know what it costs to leave, and never rent what makes you competitive.

Commodities with multiple suppliers and low switching costs? Rent those. Focus capital on what differentiates you.

Core competencies that determine if your product works? Own those. The efficiency gains aren't worth the leverage you lose.

Your vendor calls it partnership. The contract calls it something else. Every lease starts with promises of flexibility and collaboration. Every lease ends with you discovering the exit costs.

Boeing thought they were optimizing costs. They were actually selling their house to rent it back from a landlord who wouldn't fix the roof.

Four missing bolts. $23 billion.

That's your rent when you outsource what matters.