The Billion Business Model

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How to create billionaire businesses using non conventional thinking

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The Billion Business Model

  1. The Billion Business Model
  2. Did you know? <ul><li>2004, Google got US$ 23 billion in its IPO </li></ul><ul><li>2005, eBay Inc. acquired Skype Technologies for US$ 2.6 billion </li></ul><ul><li>2006, Google bought Youtube for US$ 1.65 billion </li></ul><ul><li>2007, Microsoft bought shares in Facebook for US$ 240 million (Facebook has a market value of US$ 15 billion) </li></ul><ul><li>2008, Microsoft offered US$ 48 billion for Yahoo </li></ul><ul><li>Etc, etc, etc. </li></ul>
  3. 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)
  4. Did you know that?
  5. Can we learn something from them? <ul><li>What can we (the mere mortals) learn from them? </li></ul><ul><li>Why are they so valuable? </li></ul><ul><li>What they have in common? </li></ul><ul><li>Are there any rules behind scenes? </li></ul><ul><li>Can I apply these rules in a new venture? </li></ul>
  6. The answer is yes
  7. 1 Share something 2 Sell something 3 Build a community Billion Dollar Business 4 Build a ecosystem 5 Build an infra. of cooperation 6 Use information technology The Billion Business Model
  8. 1 Share something 2 Sell something 3 Build a community Billion Dollar Business 4 Build a ecosystem 5 Build an infra. of cooperation 6 Use information technology The Billion Business Model
  9. Share something
  10. Share something <ul><li>Take the initiative and be altruistic </li></ul><ul><li>Share something valuable for a large group </li></ul><ul><li>The good must be a digital one </li></ul><ul><li>(if not you’ll be in bankruptcy) </li></ul><ul><li>Give it universally (do not discriminate) </li></ul><ul><li>Make it a social currency: </li></ul><ul><ul><li>Video, music, jokes, photos, etc. </li></ul></ul><ul><li>Democratize everything </li></ul>
  11. <ul><ul><li>The more useful your free good </li></ul></ul><ul><ul><li>the more audience you’ll get </li></ul></ul>Share something
  12. Share something examples
  13. Google: free search engine
  14. Google has around 127 million users per month
  15. Skype: free calls pc to pc
  16. Skype has around 10 million users per day
  17. Monster: free job searching
  18. Monster has around 20 million visits per month
  19. 1 Share something 2 Sell something 3 Build a community Billion Dollar Business 4 Build a ecosystem 5 Build an infra. of cooperation 6 Use information technology The Billion Business Model
  20. Sell something
  21. <ul><li>It is what will make you rich </li></ul><ul><li>It is the traditional packaged set of benefits </li></ul><ul><li>There must be a close relationship between the gratuitous good and the paid one (complementary goods) </li></ul><ul><li>Advertising is the universal complementary good </li></ul><ul><li>It can be physical or digital goods </li></ul>Sell something
  22. Sell something The more relationship between the free good and the paid one the more probability of sales
  23. Sell something examples
  24. Google sells advertising Are searching and advertising good complementors?
  25. Google sold US$ 16 billion past year
  26. Skype sells paid calls pc to phone Are free calls and paid calls good complementors?
  27. www.ipdemocracy.com Skype sold almost US$ 400 million past year
  28. Monster is paid for employers Are free job searching and paid job posting good complementors?
  29. Monster sold around US$ one billion past year
  30. 1 Share something 2 Sell something 3 Build a community Billion Dollar Business 4 Build a ecosystem 5 Build an infra. of cooperation 6 Use information technology The Billion Business Model
  31. Build a community around your offering
  32. Build a community around your offering <ul><li>Community is about flow of value not necessarily money </li></ul><ul><li>Communities make more valuable your offering </li></ul><ul><li>Encourage participation, worth of mouth, and feedback </li></ul><ul><ul><li>Use blogs, forums, reviews, ratings, etc. </li></ul></ul><ul><li>Be tolerant with diversity (clients and non clients) </li></ul><ul><li>Create a social currency </li></ul><ul><ul><li>Videos, pictures, music, jokes, etc </li></ul></ul><ul><li>Make a social network </li></ul><ul><ul><li>Include users, clients, non-clients, etc. </li></ul></ul><ul><li>Democratize innovation </li></ul>
  33. Build a community around your offering The bigger the community the more valuable your offering and the more the chance of sales
  34. Community examples
  35. IBM academic initiative This is a community of computer science professors who teach their courses using IBM’s content and products
  36. Microsoft “cinco estrellas” program This is a community of programmers trained gratis by Microsoft and rewarding them with “starts” accordingly its MS products expertise
  37. SAP community programs SAP encourage participation of the community using several rewarding programs
  38. 1 Share something 2 Sell something 3 Build a community Billion Dollar Business 4 Build a ecosystem 5 Build an infra. of cooperation 6 Use information technology The Billion Business Model
  39. Build an ecosystem around your offering
  40. Build an ecosystem around your offering <ul><li>Ecosystem is about money flow </li></ul><ul><li>Allow others gain money in your website </li></ul><ul><li>Open the doors to your partners, suppliers, clients, etc. </li></ul><ul><li>Encourage the selling of complementary goods </li></ul><ul><li>Charge a commission for others’ sales or encourage cross-selling </li></ul><ul><li>Evaluate the selling of competitive goods </li></ul><ul><li>Democratize innovation </li></ul>
  41. Build an ecosystem around your offering The bigger the ecosystem the more the opportunity of cross-selling
  42. Ecosystem examples
  43. Amazon
  44. E-Bay
  45. SAP ecosystem and partner programs
  46. 1 Share something 2 Sell something 3 Build a community Billion Dollar Business 4 Build a ecosystem 5 Build an infra. of cooperation 6 Use information technology The Billion Business Model
  47. Build an infrastructure of cooperation
  48. Build an infrastructure of cooperation <ul><li>It is the web site </li></ul><ul><li>It is where everything happens </li></ul><ul><li>For giving your free good </li></ul><ul><li>For selling your paid good </li></ul><ul><li>For the community </li></ul><ul><li>For the ecosystem (the others selling their goods) </li></ul><ul><li>It is preferable owning your own website </li></ul><ul><li>It is possible to use others websites but not recommendable </li></ul>
  49. Build an infrastructure of cooperation The better the experience in your website the more audience you get
  50. Infrastructure examples
  51. MySpace
  52. Flickr
  53. iTunes
  54. Audience
  55. 1 Share something 2 Sell something 3 Build a community Billion Dollar Business 4 Build a ecosystem 5 Build an infra. of cooperation 6 Use information technology The being-billion strategy
  56. Use information technology
  57. Use information technology <ul><li>IT is the steroids of human relations </li></ul><ul><li>Use IT in creative ways </li></ul><ul><li>Prepare for the success not for failure </li></ul><ul><li>Make your website scalable </li></ul><ul><li>Hire good programmers </li></ul><ul><li>Use algorithms to create free and paid goods </li></ul><ul><li>Make your offering mobile </li></ul><ul><li>Make your website mashable </li></ul>
  58. Use information technology The more sophisticated the technology the better the offerings
  59. Use of information technology examples
  60. Google maps
  61. Second life
  62. MyCybertwin (democratizing artificial intelligence)
  63. Don’t forget to make your offering mobile Mobile users: 3+ billions Internet users: 1.4+ billion Source: ITU
  64. 1 Share something 2 Sell something 3 Build a community Billion Dollar Business 4 Build a ecosystem 5 Build an infra. of cooperation 6 Use information technology Remember
  65. Common mistakes of web 2.0 entrepreneurs <ul><li>Sharing something without selling anything </li></ul><ul><li>Selling something without sharing anything </li></ul><ul><li>Building a community without allowing the selling of related items </li></ul><ul><li>Building an ecosystem without allowing spontaneous cooperation </li></ul><ul><li>Not using Information Technology in creative ways </li></ul>
  66. Cooperate without being a saint Compete w/o killing the competition (Branderburger & Nalebuff)
  67. Final words <ul><li>Today you can create value in a unprecedented scale </li></ul><ul><li>Money does not make happiness, but it is the consequence of creating value in great scale </li></ul><ul><li>Web 2.0 business is about create value first and extract value later </li></ul><ul><li>Cooperation in business is the science behind Web 2.0 and is still an emergent field of study. Therefore, I will appreciate feedback, examples, and counter examples </li></ul><ul><li>For more detailed methodology contact me </li></ul>
  68. Thanks for sharing <ul><li>Howard Rheingold and Andrea Saveri (www.cooperationcommons.com) </li></ul><ul><li>Brandenburger and Nalebuff (mayet.som.yale.edu/coopetition) </li></ul><ul><li>Don Tapscott (www.wikinomics.com) </li></ul><ul><li>www.wikimedia.org </li></ul><ul><li>www.webshotspro.com </li></ul><ul><li>finance.yahoo.com </li></ul><ul><li>www.strategy-business.com </li></ul><ul><li>www.rtpi.org.uk </li></ul><ul><li>www.communityplantshare.org </li></ul><ul><li>www.compete.com </li></ul><ul><li>www.webwombat.com.au </li></ul><ul><li>services.alphaworks.ibm.com/manyeyes </li></ul>
  69. Marcelo Honores Economist Master in E-Busienss 15 years of experience in IT [email_address] marcelo-honores.blogspot.com Not billionaire yet Looking for partners

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