Our Founder

Michael Rothschild

Michael Rothschild founded Profit Velocity to create a new generation of time-based financial analysis tools that would enable complex manufacturing enterprises to dramatically improve revenues and profits.

Prior to launching the company, Michael authored Bionomics: Economy as Ecosystem. The Wall Street Journal described Bionomics as “revolutionary… signaling a fundamental shift in the way people should think about economics.”

Michael’s book synthesized his intensive study of evolutionary biology with his work in competitive business strategy at The Boston Consulting Group. Today, references to a ‘company’s DNA’ or an ‘industry ecosystem’ are commonplace. At the time of its release though, Bionomics was the first book to draw compelling parallels between the structure and behavior of organizations and organisms, how companies compete to survive in market niches much as organisms compete to survive in ecological niches, and how technological progress in a market economy parallels the evolution of genetic information in nature.

After publishing his breakthrough book, Michael was consulting to a Silicon Valley semiconductor maker when he attended a talk on the ‘Theory of Constraints’ based on the work of Eliyahu Goldratt. Goldratt’s work urged manufacturing managers to focus their improvement efforts on their constraint operation, the single production step in a series of steps that most restricted the flow rate of products. It struck Michael that nothing he had learned at Harvard Business School or BCG about manufacturing cost accounting and profit margin analysis took production constraints into account. A crucial factor was missing. Michael reasoned that if you could integrate data on the speed at which products travel through key operations, you could calculate the ‘profit per machine hour’ of those products and, in effect, quantify in complete detail the actual Return on Assets of each item flowing through a factory.

Put into practice, this first time-based insight led to shocking results for Michael’s semiconductor client. While the client’s manufacturing cost accounting system reported that their many SKUs produced very similar unit margin levels, once production speed at the key manufacturing step was factored in, it was revealed that those SKUs actually generated cash at hugely varying rates per machine hour. By refocusing sales efforts on the products that were the fastest money makers, within roughly two quarters the client was able to add $40 million per year to its bottom line.

In the years to come, Michael would go on to build Profit Velocity’s team of world-class software engineers and business analysts. Today, the company offers the most advanced analytical platform for growing revenue and profit in complex manufacturing.