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I see. Let's say I see a big incumbent who's UNIQUE selling point is 'we have everyone's private photos. people have to come to us if they want to see their fr

I see. Let's say I see a big incumbent who's UNIQUE selling point is 'we have everyone's private photos. people have to come to us if they want to see their friend's photos.' I start threatening them. They pay and buy us. I get rich. The incumbent gets to keep everyone's photos. At what point in the above do we not have a business model? Oh, you mean it can't possibly WORK! Except that it just did. Well, I'm sorry, but something that just worked obviously did work.

SandB0x 14y ago
You seem to have snuck in "I start threatening them." as if that is easy and repeatable.
- logicallee 14y ago
  You seem to have snuck in the word "easy" there. Out of curiosity - what percentage of real, viable business plans do you think are "easy"? Seriously though. While not easy, it is 100% repeatable - it is one of the great ways to build a business. (Actually, regardless of whether the incumbent buys you out - their investors or those who regret being investors migth instead.)
  - ryguytilidie 14y ago
    "Out of curiosity - what percentage of real, viable business plans do you think are "easy"?" I'd imagine they vary based on the business plan. I think what others are trying to say, but you don't seem to want to hear, is that while many business ideas are say, 20% to succeed, this particular business plan is <1% to succeed.
ok_craig 14y ago
Planning on a very specific other company wanting to buy you out isn't actually a business model. A business model is something that will keep the business self-propelled.
Goladus 14y ago
Selling company stock is not a business model, howeverr great an exit strategy it might be for founders. It does mean that someone substantially values the company, but doesn't say anything about its role in the economy outside that one transaction.
muglug 14y ago
I'm fairly confident this is Path's ultimate business model.
jeremymcanally 14y ago
What you've just stated is, essentially, the business equivalent of the lottery. You could almost replace any reference to business terms in your post with "lottery" and have the same amount of truth applied. The whole point of a "model" is that it's repeatable and definable. "Getting acquired because they fear us" isn't a business model.
- nwzpaperman 14y ago
  Nature and capitalism share a structural characteristic: both require equilibrium or over-production to self-sustain. Any sustained deficit and the organism or economic entity suffers catastrophic failure. It is absolutely possible to undermine the business model of a company like Facebook by winning a marginal piece of their business away from them. Economists are so fervently engaged in trying to eliminate cash-flow/economic/business cycles because deficits have non-linear consequences when they manifest. With that, instagram had only one possible exit strategy to execute and they did.
  - SandB0x 14y ago
    I have tried to understand what you have written. Help me out here. > Nature and capitalism share a structural characteristic: both require equilibrium or over-production to self-sustain. Any sustained deficit and the organism or economic entity suffers catastrophic failure. What does this actually mean in the context of this discussion? What does this have to do with anything? > It is absolutely possible to undermine the business model of a company like Facebook by winning a marginal piece of their business away from them. Nobody is denying that Instagram were a threat to Facebook. What people are saying are that the chances of becoming a threat are incredibly small and very much based on luck. There were many other well-executed apps that did not achieve the same success. That, and combined with the absence of a genuine business model, is why people mention the similarity to a lottery ticket. > Economists are so fervently engaged in trying to eliminate cash-flow/economic/business cycles because deficits have non-linear consequences when they manifest. Please explain to me what this means. What does it mean for a deficit to have a non-linear consequence?
toomuchtodo 14y ago
A business model insinuates a viable ongoing business, where you have customers, and profit. You know, an "ongoing concern". Being bought because you're shiny? Not a business model. To say Instagram has a business model is to insult every hacker/doer/entrepreneur who is actually trying to build a real business.
- Skibb 14y ago
  That is so true and I already got -2 points for trying to same the same thing in another comment.
SCAQTony 14y ago
So, the unique selling point is that they own "everybody's memories" ("Blade Runner" reference) Remember that failed Terms of Service agreement as mentioned in the article; the one that allowed Instagram to own everyone's photos? (Memories.) It went like this: "...Some or all of the Service may be supported by advertising revenue. To help us deliver interesting paid or sponsored content or promotions, you agree that a business or other entity may pay us to display your username, likeness, photos (along with any associated metadata), and/or actions you take, in connection with paid or sponsored content or promotions, without any compensation to you...." Do you realize the "stock-photo" potential Facebook would have had by selling limited rights to say a photo of Johnny Depp smoking a Gauloise cigarette, or Gwen Stefani in high school drinking a diet coke? Maybe that was the "instagram" business model as seen by Facebook?

SandB0x 14y ago

You seem to have snuck in "I start threatening them." as if that is easy and repeatable.

logicallee 14y ago
You seem to have snuck in the word "easy" there. Out of curiosity - what percentage of real, viable business plans do you think are "easy"? Seriously though. While not easy, it is 100% repeatable - it is one of the great ways to build a business. (Actually, regardless of whether the incumbent buys you out - their investors or those who regret being investors migth instead.)
- ryguytilidie 14y ago
  "Out of curiosity - what percentage of real, viable business plans do you think are "easy"?" I'd imagine they vary based on the business plan. I think what others are trying to say, but you don't seem to want to hear, is that while many business ideas are say, 20% to succeed, this particular business plan is <1% to succeed.

ok_craig 14y ago

Planning on a very specific other company wanting to buy you out isn't actually a business model. A business model is something that will keep the business self-propelled.

Goladus 14y ago

Selling company stock is not a business model, howeverr great an exit strategy it might be for founders. It does mean that someone substantially values the company, but doesn't say anything about its role in the economy outside that one transaction.

muglug 14y ago

I'm fairly confident this is Path's ultimate business model.

jeremymcanally 14y ago

What you've just stated is, essentially, the business equivalent of the lottery. You could almost replace any reference to business terms in your post with "lottery" and have the same amount of truth applied. The whole point of a "model" is that it's repeatable and definable. "Getting acquired because they fear us" isn't a business model.

nwzpaperman 14y ago
Nature and capitalism share a structural characteristic: both require equilibrium or over-production to self-sustain. Any sustained deficit and the organism or economic entity suffers catastrophic failure. It is absolutely possible to undermine the business model of a company like Facebook by winning a marginal piece of their business away from them. Economists are so fervently engaged in trying to eliminate cash-flow/economic/business cycles because deficits have non-linear consequences when they manifest. With that, instagram had only one possible exit strategy to execute and they did.
- SandB0x 14y ago
  I have tried to understand what you have written. Help me out here. > Nature and capitalism share a structural characteristic: both require equilibrium or over-production to self-sustain. Any sustained deficit and the organism or economic entity suffers catastrophic failure. What does this actually mean in the context of this discussion? What does this have to do with anything? > It is absolutely possible to undermine the business model of a company like Facebook by winning a marginal piece of their business away from them. Nobody is denying that Instagram were a threat to Facebook. What people are saying are that the chances of becoming a threat are incredibly small and very much based on luck. There were many other well-executed apps that did not achieve the same success. That, and combined with the absence of a genuine business model, is why people mention the similarity to a lottery ticket. > Economists are so fervently engaged in trying to eliminate cash-flow/economic/business cycles because deficits have non-linear consequences when they manifest. Please explain to me what this means. What does it mean for a deficit to have a non-linear consequence?

toomuchtodo 14y ago

A business model insinuates a viable ongoing business, where you have customers, and profit. You know, an "ongoing concern". Being bought because you're shiny? Not a business model. To say Instagram has a business model is to insult every hacker/doer/entrepreneur who is actually trying to build a real business.

Skibb 14y ago
That is so true and I already got -2 points for trying to same the same thing in another comment.

SCAQTony 14y ago

So, the unique selling point is that they own "everybody's memories" ("Blade Runner" reference) Remember that failed Terms of Service agreement as mentioned in the article; the one that allowed Instagram to own everyone's photos? (Memories.) It went like this: "...Some or all of the Service may be supported by advertising revenue. To help us deliver interesting paid or sponsored content or promotions, you agree that a business or other entity may pay us to display your username, likeness, photos (along with any associated metadata), and/or actions you take, in connection with paid or sponsored content or promotions, without any compensation to you...." Do you realize the "stock-photo" potential Facebook would have had by selling limited rights to say a photo of Johnny Depp smoking a Gauloise cigarette, or Gwen Stefani in high school drinking a diet coke? Maybe that was the "instagram" business model as seen by Facebook?