September 4, 2009 in ATDC News

Business Models to Avoid

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This is a reprint of a post from the VentureLab blog – December 2008.

When building a startup idea, it is critical to think through your business model. How do you trade your widget or service for cash? There are some good ones, and there are some bad ones.

Having spent some time with Startup Gauntlet, Pitch Camp and Startup Riot, I’ve had the chance to see some really terrific business ideas. And some remarkably bad ones too.
Here are a few models to avoid:

Spaghetti: “We have five ways of making money.” If one model is good, isn’t five better? This is like a football team with three quarterbacks, they really have none. Don’t throw spaghetti against the wall to see if one of them will stick. Pick the most compelling model and focus on that.

Field of Dreams: “If we build it, surely they will come.” One of the worst things to ever happen to entrepreneurship was the horribly, horribly misleading quote – “If you build a better mousetrap, the world will beat a path to your door.” Uh, no, they won’t.

Boil the Ocean: It’s good to think big, but don’t think too big. You need to prove you can be successful with a few customers and then scale.

China: “If we can only get 1% of the Chinese market for our widget, we will be a billion dollar company.” Sure you will. Where do I sign up? Pick a small market and a way to dominate it. If you can’t find a way to do that, redefine your market. Whatever market you go after, you must be a leader.

Venn Diagram: “We will build A. People want to buy B. We think they might overlap.” Maybe. Probably not.

Bill Clinton: The man from Hope. Hope is not a strategy.

Do you have any other favorites? Send them to me and I will add them to the list.

Coming soon to a blog near you – some really good business models.

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