Emails to a Young Entrepreneur: Applying Modelling the Business

Day 122 of Self Quarantine             Covid 19 Deaths in U.S.:  137,000

Applying Modelling the Business

Slywotzky in his many books provides a wealth of business and profit models to build upon for your new venture. This week the theme of your flipping perspectives is to imagine your business through the lens of seven different business models. Each day try out a different profit model for your product or service. What would your product or service look like if it were a professional service, or a content business, or a business supported by advertising?

The photos that you include with your free writing for this week can be drawn from products that are primarily based on the profit model you choose or your could sketch a landing page for a social media campaign featuring a teaser for the business model that you want to use.

For seven days, your flipping perspective steps are:

    • Identify a different business or profit model for your product
    • Take a picture of a product which has a similar business model or sketch a landing page for your product with the new business model
    • Free write about your product and the business model and your interactions with customers attracted to that business model

In the Art of Profitability, each lesson looks at a different profit (business) model for Steve’s company Delmore.  Ash Maurya in Scaling Lean, asserts that there are only three business models to explore:

    • Direct
    • Multisided
    • Marketplaces

Maurya asserts:

“When people bring up business models, they often use a whole bunch of terms such as software as a service (SaaS), enterprise, retail, e-commerce, ad-based, freemium, viral, social, not-for-profit, marketplace, et cetera.

“The reason we end up with dozens of business model descriptors is that we attempt to label the myriad ways that a business model creates, delivers, and captures value. For instance, the difference between SaaS, enterprise, and open-source business models is in how they deliver and capture value. Even within a SaaS business model, one could implement a freemium or trial-based pricing model. Trying to create a list of business model types gets complex pretty fast.

“Instead I’m going to take a different approach. We are going to categorize business model types by the number of actors (or customer segments) in the model. Using this approach, we’ll define just three basic business model archetypes: direct, multisided, and marketplaces. In the next few sections, I’ll show you how to start with these archetypes to describe any type of business.

Maurya, Ash. Scaling Lean (pp. 50-51). Penguin Publishing Group. Kindle Edition.

For your flipping perspective exercise this week, include each of these three models in your free writing.

The Cosmos of the New Venture

The Modelling of the business is the first entry in the Wisdom cycle. A model can be as simple as charging $500 per hour for professional services or a $1000 per lesson as Zhao proposed to Steve. It can even be as simple as WhatsApp’s model of $.99 per year for unlimited texting and an assurance that there will be no advertising. Or the model can be as complicated as Google’s multi-sided advertising based model which requires Nobel prize winning economists to formulate.

No matter how complex the model, the entrepreneur establishes how they want to relate to the customer, not just the setting of a price. Modelling requires the wisdom of conceiving, experimenting and selecting the model along with relating that to the brand promise and brand experience.

 

You can find a PDF of the full Preface, Forward, Chapter 1 and Chapter 2 here.

You can find the introduction to the Cosmos of the New Venture here.

This entry was posted in Content with Context, Emails to a Young Entrepreneur, Entrepreneuring, Flipped Perspective, Learning. Bookmark the permalink.

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