Flipping – A Model That’s Easy to Get

Greg Yardley:

Well, yes – there were a rather lot of businesses there whose main hope for a liquidity event seemed to be ’sell to a larger business’. But I can’t really blame people, since this is a model that’s easy to intellectually grasp:

1. Build something cool.
2. Talk it up with the right people.
3. Wait for Google / Yahoo / Amazon / eBay / AOL / Microsoft to notice.
4. Hope like hell they’d rather buy it than build it.

See, easy – even I understand it.

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Web 2.0 – Building Features or Value?

Brad Feld:

The overwhelming attempt at pattern matching from 2001 (Bubble this, bubble that) completely misses the point. There were a number of very successful companies founded between 1999 and 2001 that didn’t implode when the bubble popped, with entrepreneurs who kept their heads down, built real businesses, and then started to reap the gains in 2003 and 2004 when the markets became more receptive to younger tech companies, especially ones that had built business engines that generated real positive cash flow (e.g. long term economic value).

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What Competition?

Jeff Cornwall:

Those who read business plans on a regular basis begin to see certain patterns that immediately send up red flags. One of the most common that I see is a when the entrepreneur downplays, or even dismisses their competition. Sometimes it is due to lack of careful research, sometimes it is due to tunnel vision, sometimes it is arrogance, and sometimes it is due to denial. But whatever the cause, ignoring the competition is most often deadly for a new business.

Dependent Relationships

Jeff Cornwall:

A risky business model is one that is one that is based on a dependent relationship with just a handful or even just one main customer. Inc.com has a good case in point from the auto industry in which GM is looking to cut its costs on the backs of its suppliers. Many of these companies are small businesses that are completely dependent on GM for their survival.