View
2.908
Download
2
Tags:
Embed Size (px)
DESCRIPTION
Curse about how to create billionaire businesses using non conventional thinking
Citation preview
The Billion Business Model Course
By Marcelo Honores
"Ignore basic economic principles at your own risk. Technology changes. Economic laws do not."
Carl Shapiro and Hal R. Varian inInformation Rules
Agenda
– Introduction
– How to conquer entire markets in the hyperconnected
world
– What to sell and what to share in the hyperconnected
world
– How to create eternal loyalty through customer
communities
– Creating value with partners through business
ecosystems
– Using Information and Communication Technologies to
build the Infraestructure of Cooperation
– The Billion Business Model
Agenda
– Introduction
– How to conquer entire markets in the hyperconnected
world
– What to sell and what to share in the hyperconnected
world
– How to create eternal loyalty through customer
communities
– Creating value with partners through business
ecosystems
– Using Information and Communication Technologies to
build the Infraestructure of Cooperation
– The Billion Business Model
Did you know?
– 2004, Google got US$ 23 billion in its IPO
– 2005, eBay Inc. acquired Skype Technologies for US$
2.6 billion
– 2006, Google bought Youtube for US$ 1.65 billion
– 2007, Microsoft bought shares in Facebook for US$ 240
million (Facebook has a market value of US$ 15
billion)
– 2008, Microsoft offered US$ 48 billion for Yahoo
– Etc, etc, etc.
Did you know?
In the last 10 years
there were more than
1,150 web 2.0 acquisitions
for around US$ 30 billion(strategy & business magazine)
Did you know that?
Can we learn somethingfrom them?
– What can we (the mere mortals) learn from them?
– Why are they so valuable?
– What they have in common?
– Are there any rules behind scenes?
– Can I apply these rules in a new venture?
The answer is yes
First lesson
The long tail
The long tail
US$ 3.2 billion US$ 250 billion
Agenda
– Introduction
– How to conquer entire markets in the hyperconnected
world
– What to sell and what to share in the hyperconnected
world
– How to create eternal loyalty through customer
communities
– Creating value with partners through business
ecosystems
– Using Information and Communication Technologies to
build the Infraestructure of Cooperation
– The Billion Business Model
How to conquer entire markets in Internet
– To know how to conquer entire markets in Internet, you
need to review the microeconomics theory
– Microeconomics 101
– Microeconomics of traditional goods (the past)
– Microeconomics of shared goods (the present)
– Microeconomics of incentives (the future)
– Warning!!!
– This part can be painful
Microeconomics of traditional goods
(the past)
Price
Quantity
SupplyDemand
P1
Q1
You pay and receive a good or service simultaneously
Microeconomics of traditional goods
(the past)
Observations:
• Price = P1 (Price > 0)
• Quantity = Q1
• Benefits of the Consumer = Green area
• Benefits of the Producer = Yellow area
• Typical for physical goods
Price
Quantity
SupplyDemand
P1
Q1
www.dell.com
Microeconomics of traditional goods
(examples)
www.travelocity.com
www.jcpenney.com
Microeconomics ofshared goods(the present)
You receive a free good in internet, such as:- free search engine service,- free calls from PC to PC,- free social networking,- etc.
Price
Quantity
Demand
P2Q2
Microeconomics ofshared goods(the present)
Observations :
• Price = P2 (Price = 0)
• Quantity = Q2
• Benefits of the Consumer = Green area
• Benefits of the Producer = 0
• Typical for digital goods
Price
Quantity
Demand
P2Q2
Microeconomics ofshared goods(examples)
www.wikipedia.org
www.google.com
www.skype.com
Microeconomics of incentives (the future)
Price
Quantity
Demand
P3Q3
0
You receive an incentive in a social currency such as:- ringtones, - music,- videos,- minutes of calling,- text messaging,- SMS,- etc.
for using or buying a good, mainly advertising
Microeconomics of incentives (the future)
Observations:
• Price = P3 (Price < 0)
• Quantity = Q3
• Benefits of the Consumer = Green area
• Benefits of the Producer = 0
• Will be typical in the mobile world
Price
Quantity
Demand
P3Q3
0
Microeconomics of incentives (examples)
search.live.com/cashback
www.virginmobileusa.com/stuff/sugarmama.do
Incentives is a new business model.
This model will be used widely in the mobile world.
Free ringtones, music, videos, minutes of calling, text messaging, SMS, etc. for watching advertising
www.yourexample.com
Microeconomics 101Conclusions
Microeconomic of traditional goods(web 1.0)
• Price = P1 (price > 0)
• Quantity = Q1
• Shared benefits between consumers and producers
• Typical in the physical world
Microeconomic of shared goods(web 2.0)
• Price = P2 (price = 0)
• Quantity = Q2 (Q2 > Q1)
• Consumer gets all the benefits
• Typical in the internet world
Microeconomic of incentives(web 3.0?)
• Price = P3 (price < 0)
• Quantity = Q3 (Q3 > Q2 > Q1)
• Consumer gets all the benefits
• Will be typical in the mobile world
Microeconomics 101Conclusions
• If you share something you will get the maximum demand• If you share something the consumer will get all the
benefits• Therefore to conquer the entire markets in the Internet
world you must to share something valuble for a large group
• If you want to conquer the entire markets in the mobile world you must incentivize your customers
• Don´t worry about free riders• In the hiperconnected world free riders are welcomed
In the hyper-connected world free riders are
welcomed!!!
Agenda
– Introduction
– How to conquer entire markets in the hyperconnected
world
– What to sell and what to share in the hyperconnected
world
– How to create eternal loyalty through customer
communities
– Creating value with partners through business
ecosystems
– Using Information and Communication Technologies to
build the Infraestructure of Cooperation
– The Billion Business Model
What to sell and what to share in the
hyperconnected world• To know what to sell and what to share in the
hyperconnected world, you should be aware of the economic properties of the goods:– The Public-Private goods theory– The complementary goods theory
• Warning!!!– This part can be boring
Public and private goods theory
• Definition:“In economics, a public good is a good that is non-rivalry and non-excludable”
• No-rivalryThe consumption of one good by one individual does not reduce its availability for others consumption. In other words: it is not scarce.
• No-excludability. One good cannot be effectively excluded from consumption of one good. In other words: you cannot control its distribution or consumption.
Examples of rivalness
• Non-rivalry goods – Goods never run out (not scarce)– Examples:
• The fact that one use a search engine does not reduce its availability
• The fact that one watch an online video does not reduce its availability
• It is a typical attribute of digital goods
• Rivalry goods – Goods can run out (scarce)– Examples:
• The fact of installing a software in a computer with a license key prevents to installing in an other computer (artificial rivalry)
• The sales of theatre tickets online is a signal of rivalry
• It is a typical attribute of physical goods
Examples of Excludability
• Non-excludability – Difficult control of distribution or consumption– Examples:
• The tragedy of the commons (pastures)• Digital goods are easily reproducible so almost imposible to exclude
• Excludability– Easy control of distribution or consumption– Examples
• Physical goods in a market are easyly to control by their owners
• Accessing a website password protected is an example of excludability
Type of goods acording the Public and private goods
theory
Type of goods Controlable Non- Controlable
Scarce Private goods Common goods / (Common-pool resources)
Non-Scarce Collective goods
Public goods
Private goods
Type of goods Controlable Non- Controlable
Scarce Private goods Common goods / (Common-pool resources)
Non-Scarce Collective goods
Public goods
Private goods
• They are scarce and the producer can control their distribution and consumption
• Almost any physical good• In Internet: password protected services• In software: Software with license key
Private goods (examples)
www.dell.com
www.travelocity.com
www.microsoft.com
Common goods / Common-pool resources
Type of goods Controlable Non- Controlable
Scarce Private goods Common goods / (Common-pool resources)
Non-Scarce Collective goods
Public goods
Common goods / Common-pool resources
• They are scarce and the producer cannot control their distribution and consumption
• Commons goods– The planet earth (global warming), water, pastures, etc
• In Internet: website hosting– Typically hard disk and bandwith
Common goods / Common-pool resources example
Collective goods
Type of goods Controlable Non- Controlable
Scarce Private goods Common goods / (Common-pool resources)
Non-Scarce Collective goods
Public goods
Collective goods
• They are not scarce but the producer can control their distribution and consumption
• They also are known as artificially scarce goods• Examples:• In the real world
– Clubs, cinemas, music concerts, theatres, stadiums
• In the hiperconneted world– Copyrighted goods– DRM goods– Patents– Commercial software– “Walled garden” communities or social networks– Premium/platinum services
Collective goods(examples)
iTunes Store
www.diamondlounge.com
www.aol.com
Public goods
Type of goods Controlable Non- Controlable
Scarce Private goods Common goods / (Common-pool resources)
Non-Scarce Collective goods
Public goods
Public goods
• They are not scarce and the producer can not control the distribution or consumption
• In the physical world– The beach, national security, city lighting, parks, etc.
• Examples:– Information in general– Digital goods (PDFs, MP3s, GIFs, etc.)– Wikipedia– Google– Yooutube, Flickr (in part)– MySpace, Facebook, and free available social networks – Napster, (in the past), kaaza, P2P in general– Etc.
Public goods Examples
www.wikipedia.org
www.google.com
www.facebook.com
The complementary goods theory
• Complementary goods:– Those directly related, if the consumption of one good
raises, the consumption of the related one raises too (not ncesarily the inverse is true)
– Example• Milk and coffee and bread
• Substitute goods:– Those inversely related. if the consumption of one good
raises, the consumption of the sustituted one lowers (not ncesarily the inverse is true)
– Example• Gasoil with ethanol
The complementary goods theory (examples)
Google: free search engine
Google has around 127 million users per month
Google sells advertising
Are searching and advertising good complementors?
Google sold US$ 16 billion past year
Skype: free calls pc to pc
Skype has around 10 million users per day
Skype sells paid callspc to phone
Are free calls (pc to pc) and paid calls (pc to real phones) good complementors?
www.ipdemocracy.com
Skype sold almost US$ 400 million past
year
Monster: free job searching
Monster has around 20million visits per month
Monster is paid for employers
Are free job searching and paid job posting good complementors?
Monster sold aroundUS$ one billion past year
What to sell and what to share in the hyperconnected world
(conclusions)
What type of good is your offfering?
Strategy
Private Sell
Collective Sell
Public good Share
Commons Discriminate price(part free/part paid)
• You can try also:– Turn private goods into public or commons goods (or
viceversa)– Turn collective goods into public (or viceversa)– Share when your business model is not clear– Make flexible your copyrighted property. Uuse creative
commons licensing instead– Share something and sell their complementary goods
What to sell and what to share in the hyperconnected world
(conclusions)
Agenda
– Introduction
– How to conquer entire markets in the hyperconnected
world
– What to sell and what to share in the hyperconnected
world
– How to create eternal loyalty through customer
communities
– Creating value with partners through business
ecosystems
– Using Information and Communication Technologies to
build the Infraestructure of Cooperation
– The Billion Business Model
How to create eternal loyalty through customer
communities
How to create eternal loyalty through customer
communities• Community is about value flow, not necesarily money• Customer community members help to increase sales
because:– They tend to repeat purchases in online businesses– They attract new customers via “word of mouth”– There is an emotional link rhater than commerical one
• Customer community members help to decrease costs because:– Reciprocity in helping each other reduces technical support costs and improves the consumption experience
– Having communities around products and services engourage innovation
• Strong communities make more valuable your offering– The full restaurant effect
How to create eternal loyalty through customer
communities
In my opinion community marketing is superior than other Internet Marketings techniques
Community Marketing Other Internet Marketing
• More fidelity• Word of mouth• Viral marketing• Emotional link• It is about value not money• Long term relationship
• SEO, SEM, Adwords and Adsense depends on the mood of Google• Spam is annoying• Affiliate marketing sucks• People don’t trust Advertising•
How to create eternal loyalty through customer
communitiesAverage users per month - myspace.com 60 million- facebook.com 40 million- linkedin.com 7 million
How to create eternal loyalty through customer communities
Examples
IBM academic initiative
MICROSOFT: Betatesting program
Free training material and software for cumputer science professors
The voluntary beta testing program saves Microsoft around US$ 500 million yearly in software testing
How to create eternal loyalty through customer communities
ExamplesSAP encourage participation of the community using several rewarding programs
How to create eternal loyalty through customer communities
Examples Communities in politics
How to create eternal loyalty through customer
communities• Strategies• Wrap your offerings with communities or social networks• Create a social currency
– Youtube-videos, Flickr-photos, Blogger-blogs, etc.
• Encourage participation and WOM, through:– Blogs, forums, reviews, ratings, social networking, etc.
• Look for volunteerism, not all should be about money• Reward the most active participants • Do not discriminate, it allows access to customers and
non-customers• Encourage social innovation: we are smarter than me
Agenda
– Introduction
– How to conquer entire markets in the hyperconnected
world
– What to sell and what to share in the hyperconnected
world
– How to create eternal loyalty through customer
communities
– Creating value with partners through business
ecosystems
– Using Information and Communication Technologies to
build the Infraestructure of Cooperation
– The Billion Business Model
Creating value with partners through business
ecosystems
Creating value with partners through business
ecosystems• Do you remember Porter’s value chain?
Primary Activities
Sup
port
Act
iviti
es
Margin
MarginInbound
Logistics
OperationsOutbound Logistic
s
Marketing&
SalesService
Procurement
Technology Development
Human Resources
Firm Infrastructure
Cost Profit = $ Price(Customer Perceived Value)
+
Creating value with partners through business
ecosystems• Forget it and use the value network
Creating value with partners through business
ecosystems• Remember the Porter´s five forces?
Threat of new competitors
entry of new substitutes
Supplier negotiation
power
Customer negotiation
power
Rivalry among competitors
Creating value with partners through business
ecosystems• Forget it and use the value network
Cooperation with
Competitors
Cooperation with
Complementors
Cooperation with
Suppliers
Cooperation with
Clients
Company
* Branderburger & Nalebuff
Creating value with partners through business
ecosystems• Remember
– Twentieth century was about competition,
– Twenty-first century is about cooperation
Creating value with partners through business
ecosystems• Strategies:• Ecosystem in business is about flow of money• Allow others make money in your website
– Open the doors of your site to clients, suppliers, complementors
• Encourage the selling of complementaring goods• Charge a commision• Evaluate the selling of competitors goods• Democratize innovation• The bigger the ecosystem the more the chances of cross
selling• If you are small join to a bigger ecosystem
Creating value with partners through business ecosystems
Examples
www.ebay.com
www.amazon.com
Creating value with partners through business ecosystems
Examples
SAP ecosystem and partner programs
NTT – Docomo i-Mode ecosystem
Agenda
– Introduction
– How to conquer entire markets in the hyperconnected
world
– What to sell and what to share in the hyperconnected
world
– How to create eternal loyalty through customer
communities
– Creating value with partners through business
ecosystems
– Using Information and Communication Technologies to
build the Infraestructure of Cooperation
– The Billion Business Model
Using ICT to build the Infraestructure of
Cooperation
Using ICT to build the Infraestructure of
Cooperation
The infrastructure of cooperation:• It is the web site• It is where everything happens• For sharing your free good• For selling your paid good• For the community• For open innovation• For the ecosystem (the others selling their goods)
Using ICT to build the Infraestructure of
Cooperation
• Use technologies of cooperation creatively
Cooperation tools for people
Cooperation tools forcompanies
Using ICT to build the Infraestructure of
Cooperation
• Be beta
Using ICT to build the Infraestructure of
Cooperation
Remember Ian Roughley• Simplicity over Completeness• Long Tail over Mass Audience• Share over Protect• Advertise over Subscribe• Syndication over Stickiness• Early Availability over Correctness• Select by Crowd over Editor• Honest Voice over Corporate Speak• Participation over Publishing• Community over Product
Using ICT to build the Infraestructure of
Cooperation
• Strategies– Create incomplete architectures/products/services
• Encoureges user generated content (co-creation)
– Be mashable– Be mobile– Be social– SAS: software as service– SOA: service oriented architecture– Use Ajax– Hire good programmers
Using ICT to build the Infraestructure of Cooperation
Examples
Examples of Infraestructure of Cooperation
Example of application of amazon web services
www.amazon.com www.liveplasma.com
Examples of Infraestructure of Cooperation
www.myspace.com www.facebook.com
Examples of Infraestructure of Cooperation
www.secondlife.com
kuler.adobe.com
1 Share something 2 Sell something
3 Build a communityBillionDollar
Business
5 Build an infra. of cooperation
4 Build an ecosystem
6 Use ICT creatively
The Billion Business Model
Exam
Question
– How to conquer entire markets in the hyperconnected
world?
– What to sell and what to share in the hyperconnected
world?
– How to create eternal loyalty through customer
communities?
– How to creating value with partners?
– How to use creatively the ICT to build the
Infraestructure of Cooperation?
1 Share something 2 Sell something
3 Build a communityBillionDollar
Business
5 Build an infra. of cooperation
4 Build an ecosystem
6 Use ICT creatively
The Billion Business ModelAnswer
Question
– How to conquer entire markets in the hyperconnected
world?
– What to sell and what to share in the hyperconnected
world?
– How to create eternal loyalty through customer
communities?
– How to creating value with partners?
– How to use creatively the ICT to build the
Infraestructure of Cooperation?
What to sell and what to share in the hyperconnected world
(conclusions)What type of good is
your offfering?Strategy
Private Sell
Collective Sell
Public good Share
Commons Discriminate price(part free/part paid)
Answer
Question
– How to conquer entire markets in the hyperconnected
world?
– What to sell and what to share in the hyperconnected
world?
– How to create eternal loyalty through customer
communities?
– How to creating value with partners?
– How to use creatively the ICT to build the
Infraestructure of Cooperation?
1 Share something 2 Sell something
3 Build a communityBillionDollar
Business
5 Build an infra. of cooperation
4 Build an ecosystem
6 Use ICT creatively
The Billion Business ModelAnswer
Question
– How to conquer entire markets in the hyperconnected
world?
– What to sell and what to share in the hyperconnected
world?
– How to create eternal loyalty through customer
communities?
– How to creating value with partners ?
– How to use creatively the ICT to build the
Infraestructure of Cooperation?
1 Share something 2 Sell something
3 Build a communityBillionDollar
Business
5 Build an infra. of cooperation
4 Build an ecosystem
6 Use ICT creatively
The Billion Business ModelAnswer
Question
– How to conquer entire markets in the hyperconnected
world?
– What to sell and what to share in the hyperconnected
world?
– How to create eternal loyalty through customer
communities?
– How to creating value with partners ?
– How to use creatively the ICT to build the
Infraestructure of Cooperation?
•Use social technologiesAnswer
Common mistakes of web 2.0 entrepreneurs
– Sharing something without selling anything
– Selling something without sharing anything
– Building a community without allowing the selling of
related items
– Building an ecosystem without allowing spontaneous
cooperation
– Not using Information Technology in creative ways
Cooperate without being a saint
Compete w/o killing the competition
(Branderburger & Nalebuff)
Thanks for sharing
– Howard Rheingold and Andrea Saveri
(www.cooperationcommons.com)
– Brandenburger and Nalebuff (mayet.som.yale.edu/coopetition)
– Don Tapscott (www.wikinomics.com)
– Carl Shapiro and Hal Varian (www.inforules.com)
– www.wikimedia.org
– www.webshotspro.com
– finance.yahoo.com
– www.strategy-business.com
– www.compete.com
Still need more help?
Need training?- Wanna the explanation of this course?
Need consulting?- Wanna turn your business into billionaire one
Need implementation?- Have great ideas but lack of technical skills?
Contact me!- Also send opinions and critics
Still need more help?
Marcelo Honores Economist Master in E-Busienss 15 years of experience in IT [email protected] marcelo-honores.blogspot.com www.linkedin.com/in/mhonores Not billionaire yet Looking for partners!!!