The Importance of a Good Business Model

November 9, 2014

in Marketing, Personal Improvement, Pricing, Sales

Yesterday I wrote about the importance of creating a great product that customers love. In Chris Dixon’s tweet above, he talks about how having a good business model is related to that overarching goal of having the product that customers love the most.

At the beginning of a startup, the business model is very important. The young company needs cash. It needs proof points for investors. Both of these hinge on sales.

In order to achieve sales, the company not only has to have something to sell, but needs to have a palatable business model that enables the customers to purchase rapidly, at premium prices, and with as little friction as possible. The better business models bring in the most cash (or otherwise become the best proof points for bringing in the most investor cash). The most cash means the best opportunity to hire the best people (also the best people are excited by uniting with a strong business model). And the best people make the best product.

I agree with Chris’ tweet and we are excited about our new move to an open source business model.

What are your thoughts about the importance of a good business model?

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