business model

My humble opinion.

The first question would be the definition of a business model, and it can
be arguable.

There are several component, and I would like to stress one, marketable
product or service.  It is not only need to be any product or service, it
needs to be marketable -- satisfy a need for the customers.

While groupon may not have an earning model, and as such, it could have
limited value or growth as an independent entity, the idea is marketable --
satisfy a need for its customers.  The end-users can find bargains and try
new things.  The merchants can use it as a marketing tool.  The problem is
the marketable idea is so successful that it established a new habit that go
AGAINST the practice.  The end-users only dig in bargains, otherwise they
would not go.  They can be the most challenging customers for merchants, etc.

As a comparison, Apple had a smartphone in market, and established the habit
that flows with the idea.

Another point of view, for Facebook.  Are end-users the real target audience
?  The company can specifically target investors !  Another point of view,
the user profile COULD be resourceful but FB just did not know how.  Let me
make an improper analog.  Suppose you have land out side of Beaumont TX, and
you are a farmer there.  The life is very touch as you could barely earn to
feed the stomach.  The land has been of less resourceful for you, until one
day, a landman came to you and said :"Sir, let's make a deal.  We think
there might be oil underneath, and we will pay royalty if it does."  You
agreed and they drilled the site and a gusher happened and you became an
instant millionaire.  This is the story of the field called Spindle Top, and
hundreds of companies, including Texaco and Gulf (now Chevron) came of that
venture.

Hope it may offer a second opinion to you.  Thanks for your insightful ideas.


I hear ya. In theory, any business with some type of resource could survive.
But time is of the essence here, which also means, cash flow is king in
startup environment.

Without a good business model from the get-go, the startup could run out of
fuel (cash) before it finds a profitable market.

So that's why I think the sooner a good business model is found, the better.

When baidu started, they were providing search service to sina.com and other
sites, but they realized that it was not a good business model. So they
pivoted. The lucky thing for them is, Google has already set a good business
model of profit by ppc ads, so, it was easy for baidu to follow suit and
copy that business model and made it work in China.

My point here is, copying an existing established business model is way
easier than trying to devise your own. For example, Facebook, even though
they've done the IPO, but there was not pre-existing successful business
model for social network in that large scale yet, so until today, they are
struggling. While microsoft, baidu, tencent, dell etc, they don't devise
their business model, they just copy what others have done successfully and
used the same business model for their market and was successful.

So, sorting out a good business model is key.