There’s only ONE business model: the “Make Money” business model. No room for interpretation. Now, let’s go back to the basics. The basics business models are not that many:
1) Sell goods by:
- Quantity transformation: buying wholesale and selling retail, or buying in enormous quantities and selling it to wholesalers;
- Geographic transformation: buying in one place and selling it in another place (import/export business);
- Time transformation: Storing fresh fish to be consumed at a later time;
- Physical transformation: manufacturing, transforming raw materials into finished products to be used by someone else;
2) Sell services by:
- Provide the services yourself;
- Have someone else provide the services;
3) Combination of two or more of the above: it could get complex there, proceed with caution. Example: movie theaters where they give away the showing of the movie (a service for the moviegoers and the movie houses), and make money on the sale of food.
Where does YouTube stands? Since Yahoo bought it for $ 1.63 billions? Simple, it falls under 1b, if you think that the product was the stock in the company, not the videos over the internet. Venture Capitalists are smart people. In the late 90’s and early 00’s they sold stock to the IPO investors, who in turn sold them to non-IPO investors. The business plan was: build to flip. But that’s what Venture Capital, and the entire stock market is all about: you make money in the sale of the shares, not in the cash flow generated by the business.
ACTION ITEMS: What is your business model, and can you describe it in 30 seconds or less?
