5 Commandments: What You Shouldn’t Do
You shouldn't invest in a business without demand;
You shouldn't exchange time for money;
You shouldn't run a business at a limited scale;
You shouldn't give up control;
You shouldn't treat a startup as an outcome rather than a process.
What tends to succeed is:
· Internet businesses.
· Innovative products or services.
· Scale economies.
Internet business models can be divided into the following seven categories.
(1) Providing subscription services.
Offer users data, information, or software for a monthly fee. Data can include leads, sales insights, proprietary databases, or images—there’s no product, no shipping, and no operational headaches.
(2) Providing content services.
The content model refers to online news magazines and blogs targeting specific markets or industries. These service providers offer free content and make money by selling ads. The content-based revenue model is the hardest to succeed with, because barriers to entry have dropped dramatically.
(3) Affiliate marketing (referral sales).
Affiliate marketing services typically not only serve consumers but also integrate non-homogeneous industries. This model is very popular in fragmented industries, mainly consisting of small and medium-sized enterprises. Affiliate marketing addresses two needs: first, consumers want to save time and money; second, businesses want to find new customers cheaply.
(4) Social networks.
(5) Intermediary systems.
Brokers bring buyers and sellers together to complete transactions. They act as middlemen in a specific industry and make money from each transaction.
(6) Advertising.
Like brokers, advertisers also match buyers and sellers. The difference is that advertisers charge advertising fees rather than transaction fees.
(7) E-commerce.
Innovative products or services
Innovation involves two types of actions: making and selling. In other words, innovation encompasses all activities before the sale.
A product can be sold through TV shopping, the internet, or QVC; distributed by 10,000 online resellers; or sold to 20 wholesalers, who then sell it to 20,000 retailers.