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99Designs—Design Done Better

Whenever I start a new business, one of the first things I need to do is get a corporate logo; most people don’t think a business is real until it has a logo. It’s a pain in the neck, and pretty expensive–both in time and money.

First, I have to find a graphic artist.  I had a great one about 15 years ago, but she stopped doing this sort of work. Since then it’s been hit-or-miss. So just finding a qualified artist who is available for a one-off project can take weeks.

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Prostitution, Drugs, Pornography, Gambling, and Religion

Silicon Valley is obsessed with business models. It’s one of the first questions we ask about any new venture: “What’s the business model?”

When I was teaching Entrepreneurship in High Technology at Stanford in the early 1990s, and later working as a strategy consultant with SDG, I started wondering just how new any business model could really be. After all, we have thousands of years of business experience behind us–are we really still inventing new models?

So I started categorizing businesses according to some basic characteristics–mostly around what they were selling and how.

I found that some companies were based on people (e.g. services companies), some required a large up-front investment, but had low marginal costs of delivery (such as software), and so forth. I also noticed that people who were good at managing one of these business models often had trouble understanding or working in the others; their instincts were all wrong.

As I grouped them together, I noticed a pattern–and it struck me how old some of these business models really are.

The basic business models I identified were:

  • Prostitution
  • Drugs
  • Pornography
  • Gambling
  • Religion
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How to Get a Rock-Star Understanding of Your Market

How do you describe your market?

When I ask people to describe their market, they often say something like, “Most of our customers are in their mid-20s, just out of college.” Or they might use titles: “Our customers are CIOs at healthcare companies.” And while these are reasonable answers, they lack the necessary insight to help focus the company on gaining more customers.

My next question: “How much of your market do you think you can get?”

Not surprisingly, the answer is usually some fraction, such as, “About 30%” or, “It’s a huge market–we’d be very happy with 2%.”

And that’s the problem. They’ve just described a demographic that might purchase their product or service, but they really haven’t described what motivates those people to purchase, or how they can influence that purchase decision.

Here is a simple but powerful way to segment and think about your market:

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You Know You Are An Entrepreneur When?

A few years ago I met a venture capitalist who tried to impress me with his entrepreneurial credentials.

“I’ve always been an entrepreneur!” he proclaimed. “After I graduated I immediately joined a little startup, named Yahoo!” He looked quite pleased with himself.

He was in his early 30’s. I thought about it a moment. “So, how many employees were there when you started?”

“Just 350 back then.” He answered smugly.

I paused. “And when did they go public? Wasn’t it around then?”

“Well, yes. Just before I joined.” Now he looked uncomfortable. Or annoyed. Either way, he seemed to think I was calling his bluff; I quickly changed the subject.

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Three Essentials for Healthy Entrepreneurship

A few weeks ago I was meeting with a woman at Stanford.  She is a Visiting Scholar, from Kyushu University where she studies innovation in the Japanese automotive and semiconductor industries.

Over coffee at Bytes, she shared with me her model of innovation.  In it, large companies hire teams of researchers to develop new technologies and businesses–in other words, to innovate.  As with any innovation, sometimes they are successful, sometimes not.  But in her world, the best innovators are in large companies, and everyone else wishes they were in large companies too.

This is not my world.

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