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Billion Busienss Model Course
 

Billion Busienss Model Course

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Curse about how to create billionaire businesses using non conventional thinking

Curse about how to create billionaire businesses using non conventional thinking

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    Billion Busienss Model Course Billion Busienss Model Course Presentation Transcript

    • 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 in Information 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 something from 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) You pay and receive a good or service simultaneously Price Quantity Supply Demand P1 Q1
    • 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 Supply Demand P1 Q1
    • Microeconomics of traditional goods (examples) www.dell.com www.travelocity.com www. jcpenney .com
    • Microeconomics of shared 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 P2 Q2
    • Microeconomics of shared 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 P2 Q2
    • Microeconomics of shared goods (examples) www.wikipedia.org www.google.com www.skype.com
    • Microeconomics of incentives (the future)
      • 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
      Price Quantity Demand P3 Q3 0
    • 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 P3 Q3 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 101 Conclusions
      • 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 101 Conclusions
      • 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-rivalry
        • The 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 Public goods Collective goods Non-Scarce Common goods / (Common-pool resources) Private goods Scarce Non- Controlable Controlable Type of goods
    • Private goods Public goods Collective goods Non-Scarce Common goods / (Common-pool resources) Private goods Scarce Non- Controlable Controlable Type of 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. microsoft .com www.dell.com www.travelocity.com
    • Common goods / Common-pool resources Public goods Collective goods Non-Scarce Common goods / (Common-pool resources) Private goods Scarce Non- Controlable Controlable Type of 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 Public goods Collective goods Non-Scarce Common goods / (Common-pool resources) Private goods Scarce Non- Controlable Controlable Type of 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.aol.com www.diamondlounge.com
    • Public goods Public goods Collective goods Non-Scarce Common goods / (Common-pool resources) Private goods Scarce Non- Controlable Controlable Type of 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.facebook.com www.wikipedia.org www.google.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 calls pc 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 20 million visits per month
    • Monster is paid for employers Are free job searching and paid job posting good complementors?
    • Monster sold around US$ one billion past year
    • What to sell and what to share in the hyperconnected world (conclusions) Share Public good Discriminate price (part free/part paid) Commons Sell Collective Sell Private Strategy What type of good is your offfering?
    • What to sell and what to share in the hyperconnected world (conclusions)
      • 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
    • 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
      • 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
    • How to create eternal loyalty through customer communities In my opinion community marketing is superior than other Internet Marketings techniques
      • SEO, SEM, Adwords and Adsense depends on the mood of Google
      • Spam is annoying
      • Affiliate marketing sucks
      • People don’t trust Advertising
      • More fidelity
      • Word of mouth
      • Viral marketing
      • Emotional link
      • It is about value not money
      • Long term relationship
      Other Internet Marketing Community Marketing
    • How to create eternal loyalty through customer communities Average 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 Examples SAP encourage participation of the community using several rewarding programs
    • How to create eternal loyalty through customer communities Examples Communities in politics
      • 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
      How to create eternal loyalty through customer communities
    • 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
      • Do you remember Porter’s value chain?
      Creating value with partners through business ecosystems Primary Activities Support Activities Margin Margin Inbound Logistics Operations Outbound Logistics Marketing & Sales Service Procurement Technology Development Human Resources Firm Infrastructure Cost Profit = $ Price (Customer Perceived Value) +
      • Forget it and use the value network
      Creating value with partners through business ecosystems
      • Remember the Porter´s five forces ?
      Creating value with partners through business ecosystems Threat of new competitors entry of new substitutes Supplier negotiation power Customer negotiation power Rivalry among competitors
      • Forget it and use the value network
      Creating value with partners through business ecosystems Cooperation with Competitors Cooperation with Complementors Cooperation with Suppliers Cooperation with Clients Company * Branderburger & Nalebuff
      • 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
    • 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
      • 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
      Using ICT to build the Infraestructure of Cooperation Cooperation tools for people Cooperation tools for companies
      • 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
    • 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 community Billion Dollar 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 community Billion Dollar Business 5 Build an infra. of cooperation 4 Build an ecosystem 6 Use ICT creatively The Billion Business Model 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 ?
    • What to sell and what to share in the hyperconnected world (conclusions) Answer Share Public good Discriminate price (part free/part paid) Commons Sell Collective Sell Private Strategy What type of good is your offfering?
    • 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 community Billion Dollar Business 5 Build an infra. of cooperation 4 Build an ecosystem 6 Use ICT creatively The Billion Business Model 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 community Billion Dollar Business 5 Build an infra. of cooperation 4 Build an ecosystem 6 Use ICT creatively The Billion Business Model 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 ?
      • Use social technologies
      Answer
    • 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_address] marcelo-honores.blogspot.com www.linkedin.com/in/mhonores Not billionaire yet Looking for partners!!!