The document discusses different business models and their key validations. It describes low and high margin/volume models, and models involving products, services, shared resources, subscriptions, resale, agencies, and audience aggregation. For each model it discusses factors like growth/problem hypotheses, cost per acquisition vs lifetime customer value, channels, buyers and sellers, and price sensitivity that are important to validate the business model. It also discusses freemium models, noting that a non-paying customer segment is funded by a different paying segment, with the goal of acquiring customers.

1. YOUR BUSINESS MODEL IS THE
PRODUCT

2. EVENTUALLY YOU WILL WANT TO
EXCHANGE CURRENCY INTO CASH

3. SO WHO IS GOING TO PAY YOU?

4. BUSINESS MODEL PATTERNS

5. LOW MARGIN HIGH MARGIN
HIGH VOLUME LOW VOLUME

6. LOW MARGIN HIGH VOLUME
NORMALLY B2C
LOW TRANSACTION COST
LARGE CUSTOMER SEGMENT

7. KEY
VALID
ATION
S
LOW MARGIN HIGH VOLUME
GROWTH HYPOTHESIS
SIZE OF MARKET

8. HIGH MARGIN LOW VOLUME
NORMALLY B2B
HIGH TRANSACTION COST
SMALL CUSTOMER SEGMENT

9. KEY
VALID
ATION
S
HIGH MARGIN LOW VOLUME
PROBLEM HYPOTHESIS
PRICE SENSITIVITY

10. SHARED
PRODUCT SERVICE RESOURCE
SUBSCRIPTION RESALE AGENCY
AUDIENCE
AGGREGATION LOAN LEASE
CAPITAL INSURANCE OPTION

11. PRODUCT
MANUFACTURE TANGIBLE ITEMS WHICH
YOU SELL FOR MORE THAN THEY COST
CARS
FMCG
iPODS

12. SERVICE
PROVIDE HELP TO OTHERS IN EXCHANGE
FOR A FEE
HAIRDRESSERS
AIRLINES
CONSULTANTS

13. SHARED
RESOURCE
CHARGE FOR ACCESS TO AN ASSET WHICH
CAN BE SHARED AMONGST MANY
PEOPLE
GYMS
THEME PARKS
iPHONE APPS

14. SUBSCRIPTION
PROVIDE VALUE ON AN ONGOING BASIS
IN RETURN FOR A RECURRING FEE
SATELLITE TV
SOFTWARE AS A SERVICE

15. KEY
VALID
SUBSCRIPTION ATION
S
COST PER ACQUISITION < LIFETIME
CUSTOMER VALUE
PROBLEM/SOLUTION HYPOTHESIS
WILL THEY PAY TO SOLVE THIS?
WILL THEY PAY YOU?

16. KEY
VALID
SUBSCRIPTION ATION
S
CPA FACTORS
MARKETING BASED ACQUISITION - PAID
REFERRAL - FREE

17. KEY
VALID
SUBSCRIPTION ATION
S
LTV FACTORS
SUBSCRIPTION PLAN COST
ATTRITION

18. RESALE
BUY LOW SELL HIGH
E-RETAIL

19. KEY
VALID
RESALE ATION
S
CHANNEL HYPOTHESIS

20. AGENCY
BROKER OR MARKETPLACE. MARKETING
AND SELLING AN ASSET YOU DON’T OWN
E-BAY
GROUPON

21. KEY
VALID
AGENCY ATION
S
VALIDATING BUYER AND SELLER
HYPOTHESIS
PRICE SENSITIVITY

22. AUDIENCE
AGGREGATION
COLLECTING ATTENTION THEN SELLING
ACCESS TO THAT AUDIENCE
BROADCAST TV
CONTENT SITES
FACEBOOK

23. AUDIENCE
KEY
VALID
AGGREGATION ATION
S
GROWTH HYPOTHESIS
VALIDATING WITH MARKETERS

24. E E
F R

25. THERE IS NO SUCH THING
AS A FREE PRODUCT

26. NON-PAYING CUSTOMER SEGMENT
IS FUNDED BY A DIFFERENT PAYING
CUSTOMER SEGMENT

27. FREEMIUM GENERALLY MEANS THE
GIVING AWAY A BASIC PRODUCT AS
AN ACQUISITION STRATEGY

28. AND SELLING THE ADVANCED
PRODUCT

29. TRIAL PERIODS
ARE NOT FREEMIUM

30. KEY
VALID
ATION
S
THE MARGINAL COST OF SERVICING
FREE CUSTOMERS IS CLOSE TO ZERO
BUT PROVIDES OTHER VALUE
(MARKETING, DATA)

31. KEY
VALID
ATION
S
CONVERSION HYPOTHESIS