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Business Models

axial.substack.com

186 pointsjmelkington25 comments

I remember reading a comment on HN a while ago about the "basic" ways to create value (and make money) that really resonated with me. I can't for the life of me find it again. It was broken down into things people want like "information that others don't have" and "moving things from place A to place B where they wouldn't be otherwise" etc. Anyone remember that?

Interested if you can find that.

How recently?

Based on what I remember testing against the parameters, somewhere around 2013 - 2015.

Remember it and have looked but haven't found it either. I think Paul Buchheit was even in the comment chain and expanded the list or argued against parts of the list or augmented parts of the list.

Just in case, have you tried using https://hn.algolia.com/?

For once my slightly obsessive bookmarking habits come in handy!

http://blog.rongarret.info/2009/10/catalog-of-wealth-creatio...

From this comment tree on the original discussion of pg's "Frighteningly Ambitious Startup Ideas": https://news.ycombinator.com/item?id=3687080

The whole tree is definitely interesting in addition to the blog post linked. Also, a follow-up post a few days later: http://blog.rongarret.info/2009/10/wealth-production-mechani...

Thank you so much, so it wasn't a comment but a full-fledged blog post. I've literally been searching for that for at least half an hour, so thanks again.

Speaking of bookmarks, I'm curious how you organize your bookmarks and personal knowledge base. I'm currently using Evernote, and it's ok, but I'm looking for something better.

What's wrong with standard Chrome bookmarks?

Well, if you consider material things as information, than the best way to create value is provide "Provide information where it's wanted" and "Optimise information delivery".

When people want information they don't have and you either can create it (by combining information, which too comes at a cost - money, time, materials) or know how to obtain it.

When people already have the information or a system put in place, you can always create value by cutting the path to information they want or need - that being optimising the system, processes, creating new ones, lowering inertia (how much willpower needs to be invested for me to obtain the information), providing it cheaper, faster, with more quality or cutting out other middlemen.

You can use this framework to minimise some even more complex providers, for example, let's take an iPhone - It is a path to information (communication device) that distinguishes from others by helping people get to information in a faster, easier and more quality way. That's why Apple focuses so much on product design and UX and keeps it's customers - they can get to information with the path of least inertia, so Apple keeps most of iOS stuff the same through years - the "used to it" part is keeping low inertia for people so they can carry their habits through new devices instead of changing them. But some other places where the product gains much traction is because people want a signal boost of their socioeconomic status - that is not an easy thing to display, but a newest iPhone is a pretty optimised signal boost for that too, so it in a way optimises information delivery there too.

I did a visual version of this some years ago to reason about companies and products.

https://www.qtra.io/hn-comment-bizmodels (pdf)

The "Arbitrage" version isn't labelled properly, but it's basically taking money from a buyer in one market and buying from a seller in another market, then delivering the service back between markets.

It's convoluted and reflects thinking from 5 years ago, but if a product/company doesn't make money one of these ways, it probably doesn't make money, and if it does, metrics are just a matter of scaling numbers in one of the nodes.

Link is dead

undead, thank you.

That link appears dead to me. Typo? I’d love to see it

Link was dead for me as well. I took a look at the URL and took “s” off the end. Maybe that is it?

https://www.qtra.io/hn-comment-bizmodel

that's correct, I changed the url to the original.

updated, sorry, ridiculous mistake.

Also useful: https://reasonstreet.co/business-model-library/

More like tear downs of each business model and what to measure when deciding

Adding: Democratization of... Knowledge, Luxury, Trading, etc.

Odd to find advertisements not being mentioned. That seems to be the goto for publishers. Excellent list!

Indeed. Some of these models are partially-applied functions - they're missing the part that actually makes them money. For instance:

> Network effects (can come in different forms such as direct, two-sided, data): Facebook — the value of the product increases as more people use it

Network effects keeps the users in, money is made by ads and surveillance.

> Crowdsourcing: YouTube — aggregate content/product from users individuals and distributes them at scale

Really, it's also a form of network effects (viewers go where most content is; creators go where most viewers are), and again, money is made by ads and surveillance.

Also, missing models:

- Regulatory arbitrage: Uber - conquering markets by breaking local laws faster than the regulators can react.

- Exploiting social capital: AirBnB - facilitating illegal or highly undesirable behavior at scale, not caring about the neighbors of service's users.

Also2:

> Open-source: Bitcoin

Bitcoin is not a company and does not have a business model. Also, "Open Source" is not a business model. "Donations" and "Paid support" are.

"Donations"

What about companies with products that are "free", with a fixed priced attached when - over an unconstrained period of time - you want to pay (Sublime Text).

Github felt like it deserved a callout here (Free if open, paid if closed). And there's no mention of free to play games which is a business mdoel powering a large chunk of a big industry.

Bitcoin is not a company and has no business model. Another day and another bad take about Bitcoin on HN.

Reply on news.ycombinator.com