Spoke today with a wise private investor, a wealthy man who understands engineers and new markets for real products that have world class winner potential. He also understands what leads to weakness and even failure. We discussed what might become the business model for his most recent startup, an exciting chip-based enterprise that has recently emerged from stealth mode. Customers are lining up at the door already, waiting for the first chips. The business model choice has to be made very quickly.
Last night my class of students from all over the Asian world (National University of Singapore in Silicon Valley) presented their business ideas. Each had clever a business model that the team believed will contribute to their idea's success. They already realize the importance of using a business model for competitive advantage.
It is wise to re-consider your business model choice before going for money. Often you'll discover the analysis will lead you to a much better business. It may require some guts, courage, to make the change, but if you do, you often end up much stronger than before.
Good examples to think about are Rambus, Qualcomm and Intel. The first makes money licensing semiconductor technology (specialized memory chips). The last makes chips and sells them. The second does both.
Other examples are Google and Yahoo and Amazon. The first is an advertising giant that uses a good (not "the best") search engine to enable its clever collection of revenue generating businesses. The last sells merchandise over the Internet and is the world's largest e-commerce company. The second is a portal that has a wide mixture of revenue generating businesses that are tied to its information gathering and disseminating portal.
BOTTOM LINE: As you ponder what else you might do to boost the competitive strength of your new enterprise, think about what different business models you could use. At least a review is worth a few hours of effort. It can help you avoid making a big mistake. It can boost you into a leadership position (Jobs and Apple got the iTunes and iPod combination right and leaped over the already existing MP3 device companies). Be wise, be bold. It can add power to your unfair advantage.