I just read a brilliant blog post by Reshma Sohoni - the CEO of seedcamp on business models. I've included the presentation below and the full post can be read by clicking on this link.
Given that she speaks to many startups and has seen their proposed business models I find her views to be quite inciteful. I'm pretty sure she must know what she's on about.
Most startups I come into contact with have a real issue with how they intent to make money, everyone wants to make money on advertising but unless you have millions of users this is a pipedream and as a consequence the other option tends to be freemium. Freemium is not straight forward because you still need to scale to a large user base with a great product such that enough of those users will pay for some premium services.
Clearly not every business is the same and neither will their business models, however the graduated business model seems to make the most sense because it's a bit more realistic and would mean that one initially picks some non-advertising model to make money and then one moves on to other revenue streams as the service and user base grow.
Reviewing these points in the context of my own startup my new mantra is "build a great marketplace and they will pay". Aside from the mantra affiliate marketing is one area that I'd like to explore in more depth, it one thing to have your own affiliates it's quite another to use someone elses affiliate network. The main point will still be the need to have a clear idea of what the cost of customer acquisition and retention is.
Subscribe