mikelally.net

I recently started getting involved with a non-profit. It offers a program for 6th-12th graders on creating, funding and launching a business.(It is amazingly cool. I am helping them with some operational elements as they prep to expand from 4 schools to 17!)

Seth has a compelling post about business models. Seth lays out his concept of a business model:

1. What compelling reason exists for people to give you money? (or votes or donations)
2. How do you acquire what you’re selling for less than it costs to sell it?
3. What structural insulation do you have from relentless commoditization and a price war?
4. How will strangers find out about the business and decide to become customers?

I like that he takes a shot at dot-coms that are still operating under the we don’t need revenue model. I’ve been in companies recently (NOT dot-coms) that are working within that model as well. Not sure how they run without revenue.

I also like what he says about #3:

The idea of connecting people, of building tribes, of the natural monopoly provided by online communities means that the internet is the best friend of people focusing on the third element, insulation from competition. Once you build a network, it’s extremely difficult for someone else to disrupt it.

When I interact with some of the students from the program, I stress their network. It is SO critical to long-term success. I am lobbying HARD to get it to be included in the curriculum.