An unbelievable number of founders come to pitch me on their companies with no idea what their business model should look like. It is never ok to put off figuring out your business model when there are so many great ones available to you. Here are a few of my favorites.
Because most startups never figure out how to provide a product that meets any kind of market need, why not use a business model that doesn’t require any kind of product at all? Better yet, the only work you have to do is recruit people who recruit more people. Of course, pyramid schemes are eventually unsustainable, but so are most startups that get acquired. Know when to get out.
This is what most startups are anyways, so it strikes me as odd that more of them don’t just adopt this business model from the start. A shell company is usually a company with only cash assets and no real operational purpose other than to hold and spend that money, much like Color.com. So get your investment capital, start paying yourself a salary, and wait for the cash to run out.
In the rare case that you know someone making an actual profit, chances are they are in a country with high corporate income taxes. While you are busy trying to get ahold of your first yacht, why not bring in a little bit of income operating as a tax haven? It’s extremely simple. Your profitable colleagues funnel all of their corporate transactions through your business, which happens to be incorporated in some Caribbean country with no corporate taxes. They get to keep more of their money, and you don’t have far to walk to look at yachts.
Ponzi schemes get all kinds of unfair bad press, but nobody ever talks about the success stories like Groupon. As long as you have something going that looks like it could be big, just keep raising money and buying back your own stock with it.
To be a proper MLM company, you really have to have a product that people could sell, but that they won’t actually be able to sell. So make some shitty software, sign up a few customers, and then come back and offer to pay them some percentage of future earnings if they can get more customers for you. Make sure to promise that they will get rich easily. I mean, how hard do they think this will be? This stuff sells itself.