Though Social media has been around for almost a decade now, 2011 is when it seems to have come of age. It is no longer the place where cool kids meet over to discuss about lovely cats. Social media is significant enough to cause revolutions and topple governments. Let us look at some of the major social media events of 2011.

Arab Spring

The biggest event of 2011 is the Arab Spring. It all started on 18th December 2010, when a Tunisian street vendor named Mohamed Bouazizi set himself on fire. While in the past, this could have been relegated to a small 3 line note in a local newspaper, social media took it to ignite fire. And from Jan 2011, this fire started spreading massively due to the virality of the social media. By 14th January the Tunisian President had to flee his country. Within days it spread eastward and Egyptian President had to quit on February 11 after a desperate attempt to cling to power. The most power dictator in the Arab world – Libyan leader Gadaffi was thrown in August.

Google+ and the battle for social media

On June 28, 2011 Google joined the battle with Facebook in Social media. Even though Google had Orkut before, this was the first serious attempt by Google to challenge the status quo in social media. They brought a clean interface, long post sizes, video hangouts with friends and a way to group friends to target posts for them. Soon Facebook and Twitter joined the battle too. Facebook brought Timeline, video chats, friend subscription like Twitter and real time tickers to monitor your friend activities. The users had a great time with the flurry of features.

Occupy wall street

Inspired by the protests in Arab world and helped by social media, on September 17 protestors started to occupy Zuccotti park near Wall Street in New York to protest against banks and government’s preferential treatment towards them. It all started with a blog post in June by a Canadian based small anti-consumerist foundation. Within 2 months the movement spread all over the world, with the slogan – “We are the 99%” echoing in all major business centers in the world.

Kolaveri Di

Until this year, viral social media entertainment was mostly restricted to the developed world, especially the US. India had no real Internet celebrity and main stream media was calling all the shots. That was until November 16, when a small time actor in South India, Dhanush launched a music video for his upcoming movie. What appeared as a simple youtube video upload and seeded in Facebook by a small marketing company became instantly viral. In just one month whole India was engulfed by the song with 20 million plus hits in just Youtube and variety of imitations. Though, the video has not gone much outside India, in terms of sheer numbers the video reached it must be one of the biggest hits ever.

Wikileaks shaking governments

In late November 2010, Wikileaks – a nonprofit social media organization, produced 200 documents from US diplomatic cables – US diplomat insider analysis on various governments and events – sent to 5 major newspapers in the world. By the start of this year the leaks got enormous momentum and over 25000 diplomatic cables were leaked and governments across the world were shaken.

We have been talking about startups for so long, but a lot of you have asked a questions – how to do you define a startup. Do all young companies come under the startup tag? Or does it include on the tech companies? There has been considerable debate on this in the startup world.

Wikipedia defines startups as: A startup company or startup is a company with a limited operating history. These companies, generally newly created, are in a phase of development and research for markets.

However, this definition doesn’t sufficiently sit with the common assumptions about startups. So, here is my definition:

This would filter out all the usual suspects Facebook, Twitter, 37 signals, while keeping Path, Instagram and all the YC funded companies. It would also cut out the new neighborhood bookstore, most service businesses and that sweet home business. Also it would cut out companies that have already reached $1-2bn in valuation (as they cannot realistically grow to become $100bn companies in 5 years).

Most of us geeks had a dream – how awesome would it be if we can get a sandwich by typing on our linux terminal. This is immortalized by the XKCD comic piece above.

Now, researchers from Technical University at Munich are bringing this to reality. Without any human intervention the robots were able to parse the command, divide the complex task into a number of units and perform them using their navigational skills. They can now make popcorn, sandwiches and sausages. In a decade, we might see these robots into kitchen rooms. These robots were given to the university for free by a startup and use the opensource ROS robotics framework. Learn more.

These robots are like the PCs of 1970s – great for geeks but with limited practical applications. But, as the software is getting increasingly sophisticated we might see more of these programmed for various practical uses.

A few months ago MIT researchers made a similar robot for baking cookings.

Also see this IEEE spectrum article

3 random observations about the Silicon valley.

Cynics would argue based on these observations that

Google’s major acquisitions: Adsense (Applied Semantics), Google Maps (Where2), Android, Youtube, Blogger, Picasa, Google Analytics (Urchin software)

Microsoft major acquisitions: Powerpoint, Hotmail, Visio, Skype, aQuantive, Powerset (merged into Bing)

Last week, research firm ZenithOptmedia has made available a few statistics. Here is the brief summary. In 2014, The total spending in advertisements will be $541b of which Internet alone will account for $113 billion. That is a jump of $40 billion (i.e. the extra revenue = Google + Yahoo + Facebook put together) from 2011. TV will continue to be in the pole position extending its lead, while predictably Newspapers and Magazines will go down. The developing markets would account for more than half the ad expenditures in 2014.

1. Total ad expenditure in 2011 in $464 billion and will grow to $541 billion in just 3 years. This is a colossal number. Think about it. The world’s biggest ad goliath – Google – makes just 6% of this total amount. With Olympics, US elections, football championship and other major events in 2012, ad expenditure is expected to spike.

2. China is the leader among the emerging markets and grow its ad spending by $16 billion in 3 years. India though is at the 7th position lagging behind Indonesia, Russia and Brazil.

3. In the next 3 years display ads will grow by 100% and classified by 50%. But the lead position will held by paid search though expected to grow by smaller amount.

4. TV ads will account for $215 billion followed by Internet ads at $113 billion. Internet’s share of ad expenditure will go up from 15% to over 21% in 2014. That means an extra $25 billion for Internet companies.

5. Google continues to consolidate its position in the ad market and now owns 44% of the total Internet ad revenues.

I have been doing some search on the Venture capital stats from National Venture Capital Association and here are the findings. Contrary to some reports, the stats show that the Silicon Valley venture system is still healthy – investing majority of the money in early stage companies, showing risk appetite. The number of deals is just in the 2002-2005 levels, lower than 1996 level and way lower than 1999. There is very little resemblance to the dot com era in any of these statistics and the investments in the last couple of years – in number of deals, deal sizes are close to the long term average. Also in the past 5 years there is a convergence in the deal size – average amount invested per deal is constant at $7 million though in the heady days of 1999-2000 it was 40% more. Based on these stats, I conclude there is still not a bubble in venture funding in the valley. The original data is here.

1.Though the number of deals has increased from the bubble burst in 2002, the number of investments done is half the 1999 levels and slightly less than even pre-dotcom bubble in 1996. Also the number of early stage investments – the bread and butter of VCs – show little increase from the depth of dotcom crisis in 2002 although seed investments show a marked improvement. (For 2011, we have only first 3 quarters data and I did a simple projection to fill the fourth quarter).

2. The average amount invested per deal has been close to $7 million in the past 10 years in contrast to how it shot up during the dot com bubble – 1998-2001. There appears correlation to be a correlation in deal sizes and economic growth. Though there was a slight increase in deal size this year bouncing from the 2009 nadir, it is possible that it is skewed by couple of big ticket investments in Facebook, Groupon and even then it is quite close to the long term mean.

3. VC investments in the first 3 quarters of 2011 show a clear preference for software – of the $21 billion invested across all sectors, software got almost a quarter. The next hottest is Biotech, followed by energy, medical devices and media. Though there are preferences, the investments are still well spread across sectors.

4. The investments – both in number deals and amount invested – is primarily in early stage companies. Seed stage comes second in the number of investments, though in terms of amount invested it is expectedly overtaken by expansion and later stage ventures.

Startups tend to move in packs – we follow a trend based on the success stories. We get inspired sometimes and sometimes we imitate. Trends are like ocean currents, if we swim with them it can help us get to our destinations faster. Plenty of successful companies including Apple, GM, Microsoft, Google were formed following the right trends. While there are some great trends to follow there are also some very trite things that got copied by too many people who will get slaughtered in the end. Here are the list of trends for 2012.

Blandest trends

1. Generic E-commerce in India. Over the last 4 years it has been raining ecommerce in India. Every other funded startup is in this space and the sector is ripe for consolidation. There are leaders like Flipkart and Infibeam and then there are 100s of also-ran. In the long run, there is only a room for a couple of generic retailers and the others have to either go after niche markets or close up. So, unless you have built a great process to make things super-easy for customers to buy, master the logistics and cut the costs it makes little sense to enter the space.
2. Local deals and Groupon clones. This is one sector that is over copied as there is hardly any barriers to entry. Seriously, the joke is up. Don’t enter the space unless you have a very deep sales network and customer visibility.
3. Social networking and social sharing. If you are building an yet another social network for blah, blah blah, please stop. There is Facebook, Twitter, Google+ and plenty of also-rans and there is no space for one more. You have to fight network effects with these big pocket goliaths.
4. Classified sites and craigslist/Justdial clones. India seems to have too many listing sites – plethora of me-too offerings in jobs, local businesses etc. This sector again faces tremendous network effects and it is a winner take all market. So, unless your offering is so good that completely shifts the bar, there is no point in trying this.

Hottest trends

1. Online education and tutoring. This is one sector that has been talked about a lot, but not many big things have come. There are no leaders in this game yet and the sector is ripe for new ideas. Given the penetration of broadband is reaching a critical mass in countries like India, it is time for seriously moving education online. There are various models to investigate from Grockit to udemy, tutorvista etc. and we believe there is plenty more to do in this space for the next few yeas.
2. Gamify things. This is the new buzzword in the silicon valley. Badges, mayorships, guessing games, points are all the rage. Gamification involves making ordinary things into a game. For example, you could have a shopping app that will make you guess on the correct price and give discounts for best answers. While there is a lot of talk, the number of successful startups are still low. There is great potential to gamify shopping, education, fitness and even travel. We expect this segment to explode.
3. Logistics and supply chain. India is getting ready for the retail revolution and online buying. But, instead of opening yet another store try to fix the back-end. This involves goods delivery, cash collection, warehousing and the software to manage the supply chains. That is where the margins will be.
4. Clean the clutter. Almost everyone of us is facing an information deluge. Our facebook and twitter feeds are overwhelming. So, if you try to clean the clutter and help people make meaning from the data it would be a killer. The Flipboard app for iPad is one such killer. Klout, a social scoring app that helps you identify the influencers in your network is another example. The possibilities include helping people make decision on movies, shopping, travel etc.
5. Jobs and Career development. 2012 will be a recession year in most of the world, including India. And this is when you need to make it easy for people to find the right jobs and preparing them for it. LinkedIn’s job listing, Naurkri.com and Monster.com are good, but there is more to be done in jobs beyond listing jobs. There are different possibilities. First, to help people leverage their network fully when they require referrals and . Branchout and LinkedIn are doing this a bit, but you can do better. Second, involves training to help freshers and career switchers. Third, involves aggregation of materials required for interviews.
6. Collaborative Commerce. In 2012 we will go beyond sharing content and move to sharing physical things. While AirBnB has gone hot in the US, there is hardly any Indian startups doing this successfully in India. The idea is to help people share or barter goods. Bartering office spaces, vacation homes, vehicles, food and used goods could reach a critical mass in next two years in the US, and in India it will be completely new.
7. Attack the singles and childfrees. In the US, according to Census, more than half the households have an unmarried person at the top. And staying single and childfree is catching on in India and rest of Asia slowly. However, most of traditional advertising and marketing is targeted at married people and families or the very young. From retirement planning to home purchases they need a custom solution. This is a segment that is stereotyped and often left alone. Those who can tailor their products giving this segment their due respect can open a vast untapped market.
8. Fitness freaks. As Indians are realizing they are getting obese and sick, we need ways to help people get fit. These include well designed apps to help people design goals and stay to them, common place gadgets for fitness targets and calorie counting, social sharing of fitness stuff etc. I have not seen a good app that helps in finding a good fitness partner, discover fitness programs and set the right targets.

If you know more, use the comment section below to let us know.

Business model defines what a business does and how it makes money doing that. In this post, we will see various popular business models used by modern businesses.

Traditional business models

1. Create a physical good, a service or a virtual good – movie, music
   This is the most fundamental business model. Create a product or service and sell it – either directly to the customer or to a distributor. The primary challenge here is building the right product and finding the right channel partner. There are three variants of this:
   • Direct Marketing to consumer. Dell and Apple are examples of this category. They sell their PCs and other electronic goods directly online or through fully owned stores in case of Apple. The advantages include disintermediation that increases margins and help build the brand experience for the consumers (in iStores free support and detailed demo of Apple’s products are usually provided)
   • Sell it to distributors and retailers. Here, the creator sells it to all retailers who want to sell the product. Most manufacturers fall under this category.
   • Exclusive rights to certain distributors. Here the creators limit the distribution to only one or a few distributors thereby allowing them a monopoly on the creator’s product & build bigger margins. Most bands, movie producers, book authors fall under this category.
2. Distributor of goods and services. The goal of distributors is to connect the creator and the consumer. The distributors aggregate goods from various creators and bring economies of scale in distribution and logistics. Big issues in this model circles around margins and logistics. The barriers to entry are low and keeping margins while competing with dozens of new entrants is a challenge. Variants of this model are:
   • General purpose retailers. These stock a wide variety of goods across verticals and their value proposition is that the customers need to deal with one party for all their shopping needs. Examples include Amazon.com, Walmart and India’s Flipkart.com
   • Focusing on a specific niche. Unlike the general purpose retailers who stock a wide variety of goods, the niche player take a vertical approach and focus on a specific category. Examples of these include Toys ‘R’ Us or Babyoye.com – a seller of baby goods in India
   • Private sales club: Here consumers pay a membership fee and get exclusive access to discounts in top brands. The creators have the advantage of tapping into the store’s upscale captive market without diluting their brand by selling in the open market. Examples include Costco and Sam’s club in the US, sites like Gilt.com and Indian sites like Exclusively.in
   • One product a day model. This is the model that Woot.com uses. Instead of selling hundreds of items, they sell only one item a day at a steep discount that enables sellers to clear inventory and have high volumes. By keeping it simple, the site’s users can easily know about the product and logistics becomes simple for the company.
     

     Woot.com sight showing only one product at a time.

   • Bricks and Clicks model. This is applicable for traditional stores who want to take advantage of their distribution network while still tapping the online audience. Stores ranging from Macy’s to Subway to Walmart allow customers to buy on their site and let them pick up the product in-store.
3. Franchisee model. This is not a standalone model, but taps the business model of a successful business and lets other businesses to piggy back on that. The businesses that piggy back are expected to pay fixed feed and/or share on the revenues to the creator of the business model. Examples include Subway, McDonalds and range of other service providers. Biggest challenges here are the increased setup costs and lesser margins in this model, though the risk is low given the bigger volumes that comes from a known brand.
4. Razor and blades model. In this model, the seller sells one product for free or very low cost hoping to sell a complementary product at high margins. For example, most Gillette razors are sold very cheap while their cartridges are expensive. Same with printer manufactures and Apple’s iTunes & appstore that bring comparatively low revenues but leads to higher sales on their hardware. To sustain this model the complementary good has to be patent protected or highly tied to their platform preventing others from producing that.  Other examples include, very high margins on restaurants selling wine, airlines selling food and cinema halls selling popcorns & soda. Content creators have also tapped this. For example, at SeekingAlpha.comfinancial analysts provide free analysis while hoping to drive traffic to their brokerage or newsletter businesses.
   

   How brokerage model works. The two houses on the right shows customers which brokerage matchmaking. Copyright of BoardofInnovation.com

5. Brokerage/Marketplace model. In this model the business matches buyers and sellers in usually auction like model and take a commission on the sales. This is one of the most powerful models that can provide enormous profits to the business and they usually enjoy monopolistic advantage. The primary challenge is in this model revolves around scale & network effects. Without enough parties on both sides of the trade, the model would not work. There are 6 variants of this.
   • Selling physical goods. Eg. Ebay. Here buyers engage in a bidding process and the highest bidder gets access to the goods
   • Renting physical goods. Eg. Airbnb.com Here buyers get access to the physical property for a limited time during their vacation.
   • Selling platform specific virtual goods. Eg. Apple’s app store and Google’s Android store sells applications of third parties to their platform users. This can be a big way to keep them tied to their hardware.
   • Financial goods. All brokerages, banks and financial institutions fall under this category.
   • Human services. Companies like oDesk.com, Elance.com, 99designs.com, Amazon’s mechanical turk bring humans to do a particular job demanded by the buyer.
   • Experience. Sites like Sweemo.com allow people to auction special memories – like taking the buyer to an exclusive concert, behind the scenes in a movie set, etc
6. Landlord model for renting products or services. This is also a fundamental model that we see all around us. The business rents a physical location or a product for a specific period for a fee. Airlines, hotels, and DVD renters like Netflix fall under this category. Though it is well understood for physical goods, it is in a nascent stage for virtual goods like books, music etc. Amazon introduced a way for kindle users to borrow & lend content. The evolution of DRM could help create plenty of new businesses on this renting digital goods. The primary challenge here is high capital investment and the need to have a constant pipeline of customers.
7. Advertisement based models for content
   This is one of the fundamental models for the Internet. Most popular sites rely on this to build their revenues. Here the business creates or sources content, and displays an ad along the content. The advertiser pays the business if the content is popular. The primary challenges here include adblocker tools by consumers and general ad wariness that the customers have gotten to. For most sites less than 10K visits per day, the display ads wouldn’t pay much to afford even one employee. There are 3 variants on this
   • Display and banner ads. These are seen in newspapers and the sides of content in popular sites. Here the advertiser is typically charged per instance of display (CPM – cost per thousand displays)
   • Pay per click ads. This is what Google and other search engines use. The advertiser is charged only when the ad is clicked.
   • Media ads. These appear in songs played in a radio or TV station like Spotify.com, Pandora.com or Youtube. Usually the user is forced to listen to the ad, while it is easy to ignore the ad in the previous two variants.
8. Subscription based model. In a subscription model the business gets a period fee from the user. Examples include telephone and home rentals. In the recent times, a lot of software companies are exploring this by selling software as a service (SaaS). A great example is 37 signals – a software company selling productivity and enterprise management tools, as a service with prices ranging from $10-$50 a month. The biggest challenge in this model is the subscriber churn – where the customers shift to a competitor’s business or move on to a substitute product. To prevent this, businesses try to lock their data (to prevent move) and try to give heavy discounts on long-term plans.
9. Lead generation and affiliate marketing. In this model, a business offers a service to the user and as a byproduct generates a lead to another business and gets a commission from them. A great example for this is India’s directory service Justdial. Here consumers call the service to enquire about packers, hotels,cinema halls etc and the company connects to 3-5 service providers and pockets a fee. The other variant is affiliate marketing, where you sell a lead to another product in your content. Instead of advertising, the end business gives money only when the lead actually leads to a sales. A lot of content sites are moving over to this model as its provides higher revenues when used with targeted audience. The primary challenge here is about building a large user base who will be using the service and how relevant lead can be generated.
10. Multilevel marketing. This is a model that converts part of the consumers into salespeople. Companies like Amway and Tupperware have been doing this successfully. There could be multiple levels of customers in a distribution hierarchy with consumers who bring in more people into the distribution network rewarded more. The primary challenge here is the inherent resistance from most customers who are wary about commercial interests abusing their personal relationships. 

New business models

1. Listing fee model. In this model the business gets a fee from a third party for uploading its content. Examples include job listings in Monster.com, LinkedIn.com and property listings in Redfin.com or Magicbricks.com The listing is generally priced based on the number of days it will appear, size of the content and the relative position of the content (content at the top or with distinct boxes priced at a premium). The primary challenge here is building the relevant userbase that will attract the potential listers.
2. Selling customer data. This is one of the modern models used by businesses that have large userbase and plenty of useful information. Popular examples include Facebook and the financial site Mint.com. Facebook enables third parties to do highly targeted ads and Mint.com uses the financial transactions of its customers to understand the spending pattern and market the appropriate products to them. New startups like PatientsLikeMe.com are also tapping this. The primary challenges include building large userbase, obtaining relevant information and privacy concerns. There are big privacy concerns here and governments are working to regulate this market. As more user content gets online, we will have more business tapping this.
3. Micropayment for content. This is a new model pioneered by sites like Flattr.com. In this model, users can support content creators for altruistic reasons and offer to pay a small micro-payment. The users pay small amounts for various articles they have read and the business aggregates these payments and passes it to the creators after deducting their fee. Wikileaks.com for example got funding from many of this readers through this. The primary challenges include motivating users to pay for something that they can get for free and high transaction costs that reduce the effectiveness of micropayments.
4. Freemium model. This is a popular model for software and service companies. The basic idea is that the company sells out two services – one for free but with limited features, and another for premium with full set of features. Examples, include games that are given out for a trial period or with limited levels (Angry birds) and Google’s business apps that are free for businesses that have less than 10 users. The free is expected to generate the buzz and build the customer base while converting a part of them into the premium version that actually makes money. The primary challenges revolve around exciting users with the free model while still motivating enough of them to convert to the premium model. In many cases, users are happy enough with the free model that the businesses are forced to deliberately cut down the features of the free model.
5. Crowdsourcing model. This is a very evolving model with a lot of potential. In this the business gets a lot of users who could do some work that could be utilized by other business for a fee. Recent examples include Quirky.com that enables inventors to tap the crowd to refine their idea and Kickstarter.com a site for startups to raise money from large number of small investors. The biggest challenges involve building the right user base who are willing to put their money or hard work.
   

   Business model of Kickstarter. Copyright of BoardofInnovation.com

6. Open source customization and maintanence. This is the model for many software companies like RedHat and MySql who make products that are open source. RedHat for example sells a flavor of the free operating system Linux that includes customization, maintenance and support. This way the user is not paying for owning the software but for its added features. The biggest challenge might be that not many customers want customization and maintenance if the underlying product is very mature and has plenty of online support.
7. No-frills model. This is a model where a business takes an existing product or a service and cuts to the bare minimum by removing all the frills, and selling this core offering at a low cost. Examples, include Tata’s Nano car and low cost airlines like Southwest airlines and Airasia. The whole model is built on reducing cost by using a variety of innovative things. The biggest challenge involves low margins and high competition.
8. Network effect model. Since most of the modern business models involve building large userbase, this model is crucial as it can help businesses to do that. In this model the business tries to focus mainly on building more users and making money eventually through selling users data or advertisements. Network effects are spiral effects that tend to create a positive feedback loop. For example, when only one person has a phone in a village there is very less motivation for others to get it, but when the number reaches a critical mass say 20%, the value gets multiplied. Almost all social networks rely including Facebook and Twitter on this model. This model cannot sustain by itself and the company needs to build a revenue model from one of the others to complement this. The biggest challenge here is motivating enough users to join during the initial phase and high value created to keep them there.
9. Pay with social currency This is a very new concept pioneered by sites like PaywithATweet.com. In this model a content creator gives away a book, music or video for free to a valid user in return for a tweet or Facebook post about the product. The tweet and posts create a virality that could be used by the author to sell extended versions of the content, the same content in other formats like a physical book or his other books and CDs. This could be the future of content selling. The biggest challenge involves motivating the authors who might not want to part with their work for social currency and the absence of any barriers to entry for this.
10. In-app commerce. This is another exciting model for mobile application creators and game builders. In this model, the game is given for free or low cost, but additional enhancements in the game can be bought for a price. Most games in Apple app store and android store now tap this. For example, in the game Dragonvale – where users breed various types of dragons, users can pay dollars to buy gems that can be used to speed up the breeding or buy exotic type of dragons that can’t be easily bred. Some games are going even more by selling other goods (like a toy or T-shirt while you are playing a shooter game) within the game interface, utilizing user’s attention. The biggest challenge involves getting enough customers to pay for the enhanced features while still not get distracted during the game. If you push too hard, users will stop playing the game and if you push too little there won’t be any sales.
11. Groupon model. In this model, the business brings a minimum volume of buyers who are promised with a certain level of discount on a product. The seller gets the volume and buyers the discount, and can be a win-win in many cases.The money to Groupon (or its clones) is through a commission in the amount sold.  This is a very hot model that was instantly copied by 100s of startups around the world. Other companies hot in this field include LivingSocial.com, Google’s Offers and India’s SnapDeal.com. The biggest challenges include lack of barriers to entry and enormous customer acquisition costs.
12. Customer rating & support. Businesses are always interested in knowing their customer tastes and what they think of them. As customer support spendings have been cut in the past decade, it becomes crucial that businesses have other means to understand their customers. This is where companies like Yelp.com, GetSatisfaction.com come in and pool in reviews, ratings and other trend information from consumer. Another interesting usage of  this model is the Indian startup Akosha.com that collects & verifies customer complaints for a fee and advocates on their behalf thereby leading to speedier issue resolution. The biggest challenges involve building userbase and motivating them to write reviews. Writing reviews is generally a social act and getting it bootstarted is hard.
13. Certification & verification. Usually a role of non-profit organizations like ISO and universities, this is also getting commercial. Certification is basically a verification from a trusted authority about an untrusted player. One prime example include Verisign that verifies legal sites that can take user’s payments. As job markets gets complex with a plethora of skillsets crowd resume of average job seekers a lot of 3rd party vendors have entered into the skill certification game. Other variants include background checks for potential employers or universities. The biggest challenge here is building the credibility and designing a foolproof process to weed out the bad from the good.
14. Sponsorship model. This is model that is prevalent in offline forms more than online ones. It is a type of advertising where a business sponsors a part of the cost of an event, content or merchandise. Examples include businesses sponsoring charity events, wrist bands for a cause etc.

Business model defines what a company does and how it makes money doing that. While there is a lot of talk on business models in startup & venture circles, there is very little study on the various models that a startup could adopt to make money. Though there are 100s of ways to make money for a startup, only a few brings optimum revenue for its structure. The past few years, technological changes has brought whole new business models – from in-game sales of goodies to paying for a book with a tweet – that we can use them as a part of our arsenal if appropriate.

A business model can be designed by a business model canvas as seen below. The key things in a business mode are Infrastructure (key activities, resources and partners), offering (value proposition), customers (customer relationships, segments) and financial elements (cost structure and revenue streams). By using this canvas we can develop the business in an organized way. The next article will cover the major business models used in the world.

As engineers and consumers we are trained to despise sales, by design or by accident. And when we don’t despise, we think of it as an ugly necessity of a business, just like you need sweepers and cleaners. We are often taken into a myth that companies like Google have  grown without marketing and that when you make a great product it can sell itself. Sometimes we think we are in an era where we can build companies that can completely ignore sales, and focus primarily on development. This is one of the fundamental mistakes that could kill a startup.

Fact 1: Sales is the fundamental essence of a business. It is the ultimate proof that you are making a product/service that is useful for the society.

Fact 2: Successful business – whether Microsoft, IBM, Google or Apple have fundamentally sound sales teams.

Face 3: Sales & Marketing is omnipresent in a successful business and could take 90% or more of the total effort.

A good entrepreneur is an ultimate salesman. We sell ideas to investors, sell visions to our partners, sell dreams to our employees, sell our branding to the society and sell products & services to our customers. Startups are magic factories and we often sell magic before we start selling the real. But at no point we can stop selling – the moment we stop selling we are dead.

Sometimes we think sales is easier compared to developing a product. It can be the farthest from truth. It is hard selling anything leave alone making a living out of that.

Salesman are the face of the company, the quality of hiring there will reflect your brand and a good salesman can boost up your image not just the current sales. If you stop paying its worth, you could cause grievous damage to your business.

5 Keys to great sales

To overcome these obstacles you need to master the following: