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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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Binary Joke

I recently saw this on a T-Shirt, and it made me smile:

There are 10 types of people in the world: those who understand binary, and those who do not.

 

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