When you examine the IPO prospectus of Zynga (S-1) and dig into the numbers you can discover how their cash flow works, where their profit comes from. That is what a "business model" is all about.
Your objective should be to build a startup business plan that is not based on dreams ("Forget them, worthless bplan," says the VC), rather it is founded on fact-based reality (workable, financeable and exciting). That's your lesson for today. A realistic bplan is built on a realistic business model. That attracts the best people, money and end users, and then customers run to make money with you.
A quick summary of the inside secrets of how the Zynga business model works was done by Douglas MacMillan and Brand Stone of Bloomberg Business Week. It reveals that less than 1 percent of Zynga's game players produce a quarter and half of its revenue ($ paid for virtual game items). Las Vegas refers to them as "whales." So does Zynga.
Knowing such realistic facts separates the dreamers from the realists. The latter get the money and get going.
Your business plan must be built on the realism of the industry you are marketing to. When you do that, the VCs and potential employees will be very confident of the future of your new enterprise.
Avoid the "we are completely different" tendency, few startups in an industry have radically different business models. VCs are wary of such new enterprises, as are experienced startup workers. If you must be radically different, then base it on different economic reality and flank into a different, uncontested, market segment.
BOTTOM LINE: Build the engine of your new enterprise to be as realistic a business model as you can. Avoid dreams and guesses. Declare your future with confidence based on facts. Show your income statement with assurance that it is driven by your realistic business model. When you use realism to build your business model, you'll have the foundation to on which to construct an unfair competitive advantage.
I wish you The Best on your Adventure!