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joyrney to » “Natural” Business Model

“Natural” Business Model

February 19th, 2008

As I am fleshing out the strategy for a dating 2.0 web experience, I’ve been thinking about what I call a “natural” business model.

A “natural” business model is when the customer demands to pay for the product. This happens when money becomes a differentiator, a resource to balance demand and supply. Consider an analogy: if you’re into mountain climbing, then you appreciate and want the climb to be strenuous. Because if it weren’t, then the mountain top would be filled with couch potatoes admiring the vistas, and you wouldn’t be able to experience the top of the world in all of its lonely beauty. Here, the pain of the climb serves as a resource to balance demand and supply. (Of course, there is also the transformational value of the pain).

Back in business, high priced luxuries have a “natural” business model. Those who wear Armani suits wouldn’t want to pay less for them, because that would devalue the exclusivity of their purchase. Speaking spiral dynamics, we’re in the orange land. But, there is more to it.

We’re basically speaking about exchanging resources (money in our case, but could as easily be intellect or generosity) for access. Auctions are the most efficient mechanism for such exchanges.

The point of all of this is that most businesses have to cajole their customers to pay for their products. BUT, if you can create a “natural” business model, the customers will be lining up to pay for the privilege of experiencing your product.

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