Business model questions

December 1, 2007

Lately I’ve spoken on a lot of panels, and for some reason I always get asked: what is your business model? This is one of those questions that people think make them sound sophisticated and hard-nosed, when in fact it is a neon sign that the person is a n00b.

Basically there are only 3 business models that apply to consumer internet businesses:

1) Advertising
2) Commerce
3) Subscription

Seriously, that’s it. You can charge a relatively small number of people for the privilege of using your site; or you get a larger number of them to buy stuff that you’re selling; or you get them an even larger number to want to buy stuff that someone else is selling. It doesn’t take a genius to understand how this all works.

So what is it people really want to know? Do they want me to detail exactly how Facebook apps split revenue? Are they expressing fundamental skepticism about one of the standard business models (seems like most of the people who ask this question are suspicious of advertising in particular)? Are they seriously expecting me to whip out my revenue projections? Or it is just that the Web 2.0 blogs talk a lot about business models, and distant readers are picking up on that? Tell me what I’m missing here, because I feel like I’m not getting it.

Web Ascent Chicago

June 4, 2007

I was honored recently when the intimidatingly hard-working Ms Kristen Nicole asked me to speak at the inaugural Web Ascent event in Chicago on Wednesday 6/20 at 7PM. It’s sort of an ironic homecoming for me, given that I reluctantly concluded in 1999 that there was no way to start a successful web company in Chicago. Since then Feedburner and 37 Signals have proven me wrong in striking fashion — so this will be a fun opportunity to look back and see what’s changed and what hasn’t.

Midwestern web peoples, Rifkin and I are looking forward to meeting you! I especially want to connect with women who are interested in any aspect of the tech business — blogging, designing, engineering, marketing, venture capital, etc — as well as alumni from the University of Chicago and engineers who want to move to California :-). Remember, one of the keys to the success of Silicon Valley is that we loves us some meeting and greeting — so Chicago techies, it is YOUR DUTY TO THE COMMUNITY to come out to drink and chat about the business.

The Accidental Entrepreneur

December 13, 2006

I was flattered to be featured on Ramit Sethi’s popular personal finance blog, IWillTeachYouToBeRich.com, as a Friday Entrepreneur… but I feel like I should confess that in my own mind, the whole entrepreneur thing is sort of a wild series of unlikely coincidences leading up to a totally unpredictable result which could still go horribly askew. Three years ago, I would have reacted to the idea of being an entrepreneur with horror or amusement: my dad is a lifelong entrepreneur, I’ve worked for a series of notorious entrepreneurs, I know very well what that life is all about, and at many levels (as many of them will admit) it’s quite irrational.

All of the associations people have with the term “entrepreneur” seem inapplicable to me, except possibly a certain innate lack of ability to fit into organizations of any size. To me, an entrepreneur — particularly a serial entrepreneur — is a very specific type of person, a type that is so common around here that you couldn’t throw a scone in any Starbuck’s within 10 miles of University Avenue without hitting one. He is a youngish male, white or Asian, a graduate of one of the more prestigious universities but generally only at the level of a bachelor’s or at most an MBA. He believes at the deepest core of his being that it is his destiny to be the CEO of a series of companies. He’s probably never really asked himself why it’s his destiny — but if he had, he would be forced to humbly admit that it’s because of his superior leadership ability. He loves the thrill of the hustle, the long days and nights of what other people would consider stressful labor or insane obsession. And here is the key point: he doesn’t need a great idea of his own to get in the game. He doesn’t need to ante up. If he happens to run across a great idea, awesome; if not, he’ll go with a good idea — or failing that, a mediocre idea.

I am the other kind of founder, the non-serial or accidental entrepreneur. Like Quentin Tarantino using the script of Reservoir Dogs to become a director, I am only in the game because I happened to produce a chip — a demo of a fully-realized product. Without that I would be a fat, happy team lead somewhere. I feel like I exist as an entrepreneur solely to serve a particular idea that I happen to have been struck with. It’s not even something I _want_ to do per se — as Naval Ravikant pointed out at 106 Miles last month, I could make a very nice living without founding a company — it’s more like I feel an obligation to others and to the idea itself.

Sorry to puncture the whole romance of the founder thing… but I thought I should keep it real…

Do you know the hex code for hot pink by heart? Love to have a good time with friends and family? Always wanted to live inside a real-life sitcom? Then it’s time for you to enlist in the Renkoo Fembot Army! You bring your A game, and Coach Troutgirl will school you in Dojo, Ajax, Comet, LAMP, and all the other hot-hot technologies (except Ruby on Rails… we don’t know that one yet). Apply now, and make your friends apply too while you’re at it. ps… if you get the job and start before the end of the year, I’ll send you to SXSW all-expenses paid…

Face to face

September 25, 2005

I’ve been doing a lot of business travelling lately — New York, Seattle, and SoCal in six weeks — which is new for me, since until a few months ago I was your typical cube veal. It’s a pain — only slightly mollified by my purchase of a pocket wifi router — but it’s changed my outlook on the whole business communication thing.

Like a typical engineer, I could never see the point in business travel before. I always figured it would be infinitely more efficient and precise and stress-free to do everything by email. But now I can see that looking someone in the eye gives you so much more information than you could possibly get via ASCII alone. You can send email back and forth forever without really being able to tell whether the deal will get done or end up with a reasonable result… but when you sit next to the person, their body language and eye contact and tone of voice tell you most of what you really want to know. And of course your willingness to actually haul your ass somewhere in a lighter-than-air machine gives your interlocutor a lot of information about how important the transaction is to you. Plus, it just goes against nature to do a consequential deal with someone sight unseen.

Not that I plan to become a road warrior or anything — although I’m already scheduled to go to Korea and the East Coast before Thanksgiving, and I’m covertly eyeing a 2-lb bubblejet printer — but I did learn yet again that even in the tech business, our bonobo nature trumps electronic communication every time.