Entrepreneurship 101: Business Models

Types of business models:
– sell a product (e.g. RIM)
– license the idea, licensee will manufacture and sell the product (e.g. biotech)
– sell a service (e.g. Surveymonkey)
– give away (or heavily subsidize) a product or service
– sell to 3rd parties [advertisers] (e.g. newspapers, TV, discount travel)
– sell complementary products (e.g. razors/blades, content/phones/phone plans, consoles/games)
content vs. hardware: can cut margins in one to sell the other (Amazon, iPad)
– transaction fee (e.g. eBay)

3 University Start-up Examples
– motion metrics
– sell to mines, sell to OEM, license technology to someone else to manufacture and sell
– D-Wave
– sell computers, license tech for others to manufacture, sell service
– Winston

Factors to consider
1) relative benefit/cost for each party
2) risk profile for each party
3) sales cycle/costs
4) bargaining power –> market structure, IP
5) complementary assets
6) two-sided market problem?
7) network effects problem?

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