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Friday, July 28, 2006

On "Business Models"

Peter Rip has an interesting post on business models. His broad thesis appears to be that many people think of a business model in a rather superficial manner, as if "what's your business model?" was a multiple-choice question. Indeed, he points to Wikipedia's article which, under "Types of business models" lists about fifteen types. As a VC, when he asks someone what their business model is, he's not asking the multiple-choice question (he's not asking "what's your business model type?"), he's looking for depth of thought. He even provides an illustrative chart of the ~10 axes over which he evaluates business models. Interestingly, much of this is what is typically addressed in a business plan, but his mindset in this case is about how the entrepreneur sees the pieces fitting together, rather than what the entrepreneur plans to spend his/her time doing.

His closing is apt:
So, quick, what's your business model, anyway?
(via Feld Thoughts)