the billion business model
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How to create billionaire businesses using non conventional thinkingTRANSCRIPT
The Billion Business Model
Did you know?
– 2004, Google got US$ 23 billion in its IPO– 2005, eBay Inc. acquired Skype Technologies for US$
2.6 billion– 2006, Google bought Youtube for US$ 1.65 billion– 2007, Microsoft bought shares in Facebook for US$ 240
million (Facebook has a market value of US$ 15 billion)
– 2008, Microsoft offered US$ 48 billion for Yahoo– Etc, etc, etc.
Did you know?
In the last 10 years there were more than
1,150 web 2.0 acquisitions for around US$ 30 billion
(strategy & business magazine)
Did you know that?
Can we learn somethingfrom them?
– What can we (the mere mortals) learn from them? – Why are they so valuable?– What they have in common?– Are there any rules behind scenes?– Can I apply these rules in a new venture?
The answer is yes
1 Share something
2 Sell something
3 Build a community
BillionDollar
Business
4 Build a ecosystem
5 Build an infra. of cooperation
6 Use information technology
The Billion Business Model
1 Share something
2 Sell something
3 Build a community
BillionDollar
Business
4 Build a ecosystem
5 Build an infra. of cooperation
6 Use information technology
The Billion Business Model
Share something
Share something
– Take the initiative and be altruistic
– Share something valuable for a large group
– The good must be a digital one (if not you’ll be in bankruptcy)
– Give it universally (do not discriminate)
– Make it a social currency:– Video, music, jokes, photos, etc.
– Democratize everything
The more useful your free goodthe more audience you’ll get
Share something
Share something examples
Google: free search engine
Google has around 127 million users per month
Skype: free calls pc to pc
Skype has around 10 million users per day
Monster: free job searching
Monster has around 20million visits per month
1 Share something
2 Sell something
3 Build a community
BillionDollar
Business
4 Build a ecosystem
5 Build an infra. of cooperation
6 Use information technology
The Billion Business Model
Sell something
– It is what will make you rich– It is the traditional packaged set
of benefits– There must be a close relationship
between the gratuitous good and the paid one (complementary goods)
– Advertising is the universal complementary good
– It can be physical or digital goods
Sell something
Sell something
The more relationship between the free good and the paid one the more probability of sales
Sell something examples
Google sells advertising
Are searching and advertising good complementors?
Google sold US$ 16 billion past year
Skype sells paid callspc to phone
Are free calls and paid calls good complementors?
www.ipdemocracy.com
Skype sold almost US$ 400 million past
year
Monster is paid for employers
Are free job searching and paid job posting good complementors?
Monster sold aroundUS$ one billion past year
1 Share something
2 Sell something
3 Build a community
BillionDollar
Business
4 Build a ecosystem
5 Build an infra. of cooperation
6 Use information technology
The Billion Business Model
Build a communityaround your offering
Build a communityaround your offering
– Community is about flow of value not necessarily money– Communities make more valuable your offering– Encourage participation, worth of mouth, and feedback
– Use blogs, forums, reviews, ratings, etc.– Be tolerant with diversity (clients and non clients)– Create a social currency
– Videos, pictures, music, jokes, etc– Make a social network
– Include users, clients, non-clients, etc.– Democratize innovation
Build a communityaround your offering
The bigger the community the more valuable your offering and
the more the chance of sales
Community examples
IBM academic initiative
This is a community of computer science professors who teach their courses using IBM’s content and products
Microsoft “cinco estrellas” program
This is a community of programmers trained gratis by Microsoft and rewarding them with “starts” accordingly its MS products expertise
SAP community programs
SAP encourage participation of the community using several rewarding programs
1 Share something
2 Sell something
3 Build a community
BillionDollar
Business
4 Build a ecosystem
5 Build an infra. of cooperation
6 Use information technology
The Billion Business Model
Build an ecosystemaround your offering
Build an ecosystemaround your offering
– Ecosystem is about money flow– Allow others gain money in your website– Open the doors to your partners, suppliers, clients,
etc.– Encourage the selling of complementary goods– Charge a commission for others’ sales or encourage
cross-selling– Evaluate the selling of competitive goods– Democratize innovation
Build an ecosystemaround your offering
The bigger the ecosystemthe more the opportunity of
cross-selling
Ecosystem examples
Amazon
E-Bay
SAP ecosystemand partner programs
1 Share something
2 Sell something
3 Build a community
BillionDollar
Business
4 Build a ecosystem
5 Build an infra. of cooperation
6 Use information technology
The Billion Business Model
Build an infrastructure of cooperation
Build an infrastructure of cooperation
– It is the web site– It is where everything happens– For giving your free good– For selling your paid good– For the community– For the ecosystem (the others selling their goods)– It is preferable owning your own website– It is possible to use others websites but not
recommendable
Build an infrastructure of cooperation
The better the experience in your website
the more audience you get
Infrastructure examples
MySpace
Flickr
iTunes
Audience
1 Share something
2 Sell something
3 Build a community
BillionDollar
Business
4 Build a ecosystem
5 Build an infra. of cooperation
6 Use information technology
The being-billion strategy
Use information technology
Use information technology
– IT is the steroids of human relations
– Use IT in creative ways– Prepare for the success not for
failure– Make your website scalable– Hire good programmers– Use algorithms to create free and
paid goods– Make your offering mobile– Make your website mashable
Use information technology
The more sophisticated the technology
the better the offerings
Use of information technology examples
Google maps
Second life
MyCybertwin(democratizing artificial intelligence)
Don’t forget to make your offering mobile
Mobile users: 3+ billions
Internet users: 1.4+ billion
Source: ITU
1 Share something
2 Sell something
3 Build a community
BillionDollar
Business
4 Build a ecosystem
5 Build an infra. of cooperation
6 Use information technology
Remember
Common mistakes of web 2.0 entrepreneurs– Sharing something without selling anything– Selling something without sharing anything– Building a community without allowing the selling of
related items– Building an ecosystem without allowing spontaneous
cooperation– Not using Information Technology in creative ways
Cooperate without being a saint
Compete w/o killing the competition(Branderburger & Nalebuff)
Final words
– Today you can create value in a unprecedented scale– Money does not make happiness, but it is the
consequence of creating value in great scale– Web 2.0 business is about create value first and
extract value later– Cooperation in business is the science behind Web 2.0
and is still an emergent field of study. Therefore, I will appreciate feedback, examples, and counter examples
– For more detailed methodology contact me
Thanks for sharing
– Howard Rheingold and Andrea Saveri (www.cooperationcommons.com)– Brandenburger and Nalebuff (mayet.som.yale.edu/coopetition)– Don Tapscott (www.wikinomics.com) – www.wikimedia.org– www.webshotspro.com– finance.yahoo.com– www.strategy-business.com– www.rtpi.org.uk– www.communityplantshare.org– www.compete.com– www.webwombat.com.au– services.alphaworks.ibm.com/manyeyes
Marcelo Honores Economist Master in E-Busienss 15 years of experience in IT [email protected] marcelo-honores.blogspot.com Not billionaire yet Looking for partners