I’ve devoted years of my life, putting together all the materials and resources that have helped me along the way of becoming a digital entrepreneur and head of business development for a tech startup.
I thought it just made sense to document those things along the way so that I could form a more in-depth understanding by writing about it, and you, my reader, could gain insights and expertise, without spending hours and hours of research.
In this post, I’m assembling all the resources you need to get going with a business if you’re ready to leap becoming a digital entrepreneur. I suggest there are four key areas when starting your business, which we’ll group under the acronym of MOVE, standing for:
Mindset
Operations
Velocity (momentum)
and Execution
Each of those areas needs to be mastered to design, launch, and iterate a successful business. This isn’t a size fits all model, neither the only one possible. But it is a model that can help you get “moving”.
When starting a business, in particular, a digital business, you should have a 10X mindset. The reason is you might be starting a venture in a competitive space; none knows your brand, you might be missing the budget to grow it steadily.
Thus, you need to think and act smart. You can’t rely on conventional wisdom, or already walked paths. While business best practices will be your baseline, you will need to have a growth mindset, where each action you take needs to be measured and deemed successful if it gives you massive traction.
Never run out of ideas
A common belief is that ideas only come to creative people. In reality, we all have a flow of creativity wired in our minds. We just need to develop the right mindset, and for that reason, the guide below can help you achieve just that:
If you heard that ideas are overrated in business, that’s correct. That doesn’t mean ideas are not important.
But just that in business you will never know whether an idea will work in the real world, until you don’t test it. That is why it’s critical to have a framework to test ideas quickly; keep those that work and that have the potential to become your next business!
Find your sweet-spot
Starting a successful business is not an easy thing to do, as most startups fail in the first years of operations. For that matter, you need to have the resources to get going the first stage and have things take off as quickly as possible.
However, in many cases, a startup will really take off and become a mature and successful organization in at least 5-10 years from its inception. That requires a huge amount of stamina, passion, and resources to get going.
Therefore, in many cases, to launch a successful business, it is important to balance two dimensions:
Personal dimension: are you passionate about the business you’re stating? The problem it is solving? Or about managing the team that will solve that problem?
Financial dimension: is there a market ready to respond to your potential product? If not, do you have enough financial resources to get going until there will be a market-ready for your product?
Those two dimensions are critical to launching a successful company. Passion (either for the business or the team that will manage it) is critical to get going for the long-run and even when things seem not to work out.
The financial dimension is critical, either to enable your business to gain traction (if there is a defined, existing market to start with). Or to be able to get going even when the market is not ready yet. Think of the case of a high tech product, based on new technology. You will need funding to make sure you will bring that product to market effectively.
The third dimension, which is about feasibility is less important compared to the two above.
When you do balance those dimensions, you are on the right path.
From Blue Ocean to Blue Sea
A blue ocean is a strategy where the boundaries of existing markets are redefined, and new uncontested markets are created. At its core, there is value innovation, for which uncontested markets are created, where competition is made irrelevant. And the cost-value trade-off is broken. Thus, companies following a blue ocean strategy offer much more value at a lower cost for the end customers.
It’s easy to start a business in a crowded space. It doesn’t take to much searching or tinkering. You just need to look at what others are doing and fo for it. That’s the reason why everyone wants to start her own restaurant, even if it will hardly make any money.
And if you need to start a business as a means to give you the financial resources for you and your family that is fine.
However, if you have the option to build the kind of business you want, you might want to search for your blue ocean. A blue ocean is an uncontested space where you can build your business and become the key player.
On the other hand, a viable option is also to look for what I called a Blue Sea:
Another common mistake when starting a business is the complete lack of definition of what kind of business you want to build and how you want to be recognized. In short, call it as you like, positioning, targeting, niche, or whatever.
What matters is to find your perspective. Building a successful business is about telling your side of a story, finding your unique perspective. What is that you do that makes you different, why would people both buy from you in the first place?
How do you pick a microniche?
The minimum viable audience (MVA) represents the smallest possible audience that can sustain your business as you get it started from a microniche (the smallest subset of a market). The main aspect of the MVA is to zoom into existing markets to find those people which needs are unmet by existing players.
Let’s start with a simple example. Let’s say you’re opening up a bookstore, looking for opportunities to kick off the store.
Where do you start?
Theplatformwith the most data when it comes to books is definitelyAmazon. You start from theAmazonbroadest categories to start looking for opportunities:
There was a time when it was possible to stop there. As the web was not such a crowded space for you to start a business. However, nowadays you need to a lower level to look for your microniche.
Thus, saying something like “I’ll start from literature, or historic fiction” isn’t enough. Those are too broad. So where do you start?
Go a level down:
WithinAmazon‘s literature and historical fiction, we can identify a further category for us to start with. For this example I took something like “historical fiction” and went a level down:
I selected for instance, “Reinassance” as the key area within the micro-target I’m picking to kick off my businessdistributionstrategy.
Thus the process looks something like that:
Within that microniche you can see how the bestseller has quite some substantial reach:
The interesting thing is that what it might actually seem a very small audience it turns out to be a decent audience for a business that is starting out.
Indeed, by crossing the data fromAmazonto the keyword volume for the book’s author “Johanna Lindsey” you can see how she is a micro-celebrity:
Example of how a microniche analysis uncovers the audience around a micro-celebrity and it opens up opportunities to kick off your businessdistribution(data: SEMRush)
It is interesting to notice how we uncovered a potential audience made of over four thousand people each month, by just doing simple research onAmazonand by crossing that with keyword volume.
Thus, if you were to start a bookstore in that category you might want to make sure to have all the books of that author available, create acontentstrategyaround it.
And for instance, invite the author for an off-line session with her fans. While for instance, also transmitting that live online so that you can reach a wider audience and create the first set of loyal customers for your bookstore!
Pretotype
Pretotyping is a mixture of the words “pretend” and “prototype” and it is a methodology used to validate business ideas to improve the chances of building a product or service that people want.
Another huge, and common mistake many entrepreneurs or aspiring entrepreneurs make when starting a business is to focus on technicalities instead of asking the most important question: do people want this?
In short, idea validation is extremely important. You can use several frameworks for that, as the lean canvas. Or you can use a technique called pretotype. Or better yet move from the build > demo > sell approach, to a demo > sell > build approach. To avoid any “market waste.”
From build > demo > sell to demo > sell > build
When you get into the process of quickly validating your ideas, to get passed the most difficult stage; where you need to find that moment when customers finally get what you’re offering them, at the point that you need to barely explain what you’re selling, as they will buy with limited friction.
Business people calls this product-market fit. Once again, the definition is not important. What matters is that you pass that stage to build a valuable business, quickly.
Operations
In a digital business, setting up the operations doesn’t necessarily mean to build up physical facilities. Instead, that is about drafting a business model that will allow you to be competitive in the marketplace.
This process isn’t a one-time thing. Indeed, before your business model would take off, you’ll need to iterate it over and over again.
When will your business model be competitive? Primarily when it has reached:
In short, the right business model will be able to have a built-in monetization strategy that generates income, based on repeatable processes, that are sustainable in the long run.
Also, your business model will need to leverage on a flywheel effect, where monetization powers up your brand, rather than diluting it. In other words, when you start making money, that monetization needs to reinforce your brand, so that more people will want to deal with your company.
As your brand gains momentum, you can leverage it to enjoy higher and higher margins. When you enjoy fat margins (there isn’t a fixed percentage, but it depends on the industry and competition), that’s when you’ve mastered the operational part.
In general, the more the gap between revenues and costs increases (revenues grow faster than costs), the more you’re on the right path to building a long-term competitive advantage.
Stay lean
Unless you got enormous funding for your business, you want to follow a lean methodology approach. This will help you to stay in business for as long as possible while tuning your business for the market.
Stay focused
Back in the 1970s, Intel was among the most respected and admired companies in Silicon Valley. During that time Intel’s CEO, Andy Grove, was the man who managed to drive organizational change. Andy Grove did that via a goal-setting process called OKRs or objectives and key results. Where the objective is the direction, toward which the organization needs to be in the medium term. And the key results are milestones, things that allow the company to get there. Those key results need to be easily trackable, understandable and shared across the company.
While you will be tempted to test many things out, and you do want to test many of them. You still want to keep a focus on 2-3 key objectives that can have a massive impact on your business.
Stay fast and frugal
Speed is critical in business and you need to be very quick, especially when you’re starting things out because in order for them to gain traction it will initially take a lot of push.
This business plan will help you to come up with a business model to test in the marketplace:
Velocity and Momentum
At this stage, before you go to the execution stage, it is crucial you know what distribution channels you can tap into. For that matter, you need to prioritize on the acquisition or growth channel that might work best, based on the strategy you picked.
Instead of trying to tap into all the possible distribution channels, mastering one, in the short run is probably the most effective strategy in many cases.
For that matter, you need to understand whether you might want to leverage business development, growth marketing, traditional sales, and marketing or else.
Switch on the engines of growth
In the Lean Startup, Eric Ries defined the engine of growth as “the mechanism that startups use to achieve sustainable growth.” He described sustainable growth as following a simple rule, “new customers come from the actions of past customers.” The three engines of growth are the sticky engine, the viral engine, and the paid engine. Each of those can be measured and tracked by a few key metrics.
Once all the conditions above are met, you need to push on growth. Eric Ries points out that you have, usually, three engines of growth you can leverage on.
Growth framework
Growth hacking is a process of rapid experimentation, coupled with the understanding of the whole funnel, where marketing, product, data analysis, and engineering work together to achieve rapid growth. The growth hacking process goes through four key stages of analyzing, ideating, prioritizing and testing.
It’s very important that at this stage, you have a growth framework in place to pass the several stages of growth you need to build a sustainable company.
Execution
When you start executing, that is when you will be able to gather critical feedback to understand whether or not you’re moving in the right direction. This is an essential part of the MOVE model.
In this phase, you need to gather feedback on several areas:
Is the business gaining momentum? Remember, momentum will be judged on unconventional, two-fold, or 10X growth basis
Does the market like my business model? You can decide that by growth or profitability or both
How effective is my strategy? Is the real world validating it or do I need to go back and tweak my business model?
What distribution channel is working so far? You need to double down on what’s working
Am I spending too much time theorizing? If so, go back to the execution phase to gather more feedback from the marketplace!
Key takeaways on the MOVE framework
When you start moving, you also need to make sure you’re going in the right direction. That is why, in the execution phase, you need to reconsider whether what you’re doing is helping you achieve the 10X growth you were looking for at the beginning of the MOVE model.
Or whether yourbusiness model generates growing margins. Or yet, whether you need to leverage network effects to enhance growth. Moving back and forth in the MOVE model might help you gain traction to generate a long-term competitive advantage!
Tools, frameworks and additional resources
It is always important to highlight that tools and frameworks are things that need to help us in moving toward our goal. What tool and framework we might want to use is also based on the kind of business we want to build.
The power of the brand and your brand identity
An effective business model has to focus on two dimensions: the people dimension and the financial dimension. The people dimension will allow you to build a product or service that is 10X better than existing ones and a solid brand. The financial dimension will help you develop proper distribution channels by identifying the people that are willing to pay for your product or service and make it financially sustainable in the long run.
In the business world, it is getting more and more prevalent the approach of testing all it’s possible to make your business successful and prioritize the things that work.
However, building up a successful business is also, and especially a matter of choice and identity. In short, if you’re building a company that might well be the representation of your ideas and belief applied to business.
As such, it is fundamental to have in mind what kind of business you don’t want to build. Therefore, you will need to set some boundaries in building up your company.
What’s your essence?
A Business Model Essence according to FourWeekMBA is a way to find the critical characteristics of any business to have a clear understanding of that business in a few sentences. That can be used to analyze existing businesses. Or to draft your Business Model and keep a strategic and execution focus on the key elements to be implemented in the short-medium term.
While business models are complex abstractions, when you start a business, that is the best time to define its essence. What are the core and critical characteristics you want to build your business around?
Master the problem
Leaner Canvas by Ash Maurya of LEANSTACK
If you’re building a business, you need to master your customers, or being clear about the kind of customers you want. That might sound counterintuitive, yet from the way you design your business model, it will also depend on the kind of customers you’ll attract.
And the most important aspect you need to focus on is to understand what problems they have and solve them. That is the simplest route. Two things to highlight. First, solving a problem is not about functionality alone. Solving an emotional problem is as important as solving a functional problem in certain industries.
If you think about luxury items, a purse is not an object where a woman can deposit her stuff. A purse represents a woman’s status. In short, that woman will feel special, act as such by wearing that purse. This is the whole logic of brand building and demand generation.
Thus, as an entrepreneur, if you’re thinking about a bag as a functional object you’re missing the main point. Instead, you need to start from the psychology of your ideal customers and understand what problems and desires they have, which connects to the second point.
Second, from the encounter of functionality and demand generation, that is how you build a successful business. There are certain industries where functionality matters more than perception. And other industries where instead perception and the ability to generate demand can be very powerful.
Understanding when to leverage functionality and when to leverage on perception is a key element of your business strategy. For instance, in the digital world, we might think that most of the value is driven by algorithms that objectively score and rank things out.
However, that is not the case. Algorithms are driven by business logic, and perception is shaped to drive and incentivize users to act in a certain way. For instance, in 2019, Twitter redesigned the whole platform.
In a story by WIRED about the Twitter platform redesign, Stone, Twitter’s co-founder highlighted, referring to the past years, “we were just working as fast as we could…we weren’t trying to make it look good at all.”
Yet when Twitter understood the importance of changing the perception on its platform beyond growth metrics, that is also when it started to invest massive resources on its redesign, to nudge people to act on the platform in a certain way. This is extremely important to understand.
Because a redesign is not just a piece of new code added to the platform, but it represents the essence of the business. How you want your business to be perceived and how ideally you want people to act in the context of the boundaries you defined with your core values.
When you build a business you get your chance to build a context. Would you live in a context that you don’t like or agree with?
Design your business model
The business model canvas is a framework proposed by Alexander Osterwalder and Yves Pigneur in Busines Model Generation enabling the design of business models through nine building blocks comprising: key partners, key activities, value propositions, customer relationships, customer segments, critical resources, channels, cost structure, and revenue streams.
Blitzscale (only if needed)
The Blitzscaling business model canvas is a model based on the concept of Blitzscaling, which is a particular process of massive growth under uncertainty, and that prioritizes speed over efficiency and focuses on market domination to create a first-scaler advantage in a scenario of uncertainty.
In certain scenarios, the business might look like a war. In those scenarios of threat, where your business might not make it to the next day, a tactic like Blitzscale might work.
Otherwise, create options to scale from microniches
A microniche is a subset of potential customers within a niche. In the era of dominating digital super-platforms, identifying a microniche can kick off the strategy of digital businesses to prevent competition against large platforms. As the microniche becomes a niche, then a market, scale becomes an option.
As you become an authority and establishes in a microniche, you have options to scale your presence in adjacent areas. As those options are unlocked you get to choose if it makes sense to expand or to strengthen your presence.
Redesign your business model at each growth stage
Business modeling is a discipline that helps us experiment with the business we’re creating in the real-world so that we can quickly test the underlying assumptions of a business model and iterate to build a viable business with a long-lasting advantage. Mind mapping can help you sketch that business model.
As you scale, the characteristics of your market, your audience, and the customer base will change accordingly. This will require a careful iteration process to prevent to disappoint your existing customer base while trying to expand your presence.
An effective business model has to focus on two dimensions: the people dimension and the financial dimension. The people dimension will allow you to build a product or service that is 10X better than existing ones and a solid brand. The financial dimension will help you develop proper distribution channels by identifying the people that are willing to pay for your product or service and make it financially sustainable in the long run.
Business model innovation is about increasing the success of an organization with existing products and technologies by crafting a compelling value proposition able to propel a new business model to scale up customers and create a lasting competitive advantage. And it all starts by mastering the key customers.
Digital and tech business models can be classified according to four levels of transformation into digitally-enabled, digitally-enhanced, tech or platform business models, and business platforms/ecosystems.
A digital business model might be defined as a model that leverages digital technologies to improve several aspects of an organization. From how the company acquires customers, to what product/service it provides. A digital business model is such when digital technology helps enhance its value proposition.
A tech business model is made of four main components: value model (value propositions, mission, vision), technological model (R&D management), distribution model (sales and marketing organizational structure), and financial model (revenue modeling, cost structure, profitability and cash generation/management). Those elements coming together can serve as the basis to build a solid tech business model.
A platform business model generates value by enabling interactions between people, groups, and users by leveraging network effects. Platform business models usually comprise two sides: supply and demand. Kicking off the interactions between those two sides is one of the crucial elements for a platform business model success.
A Blockchain Business Model is made of four main components: Value Model (Core Philosophy, Core Value and Value Propositions for the key stakeholders), Blockchain Model (Protocol Rules, Network Shape and Applications Layer/Ecosystem), Distribution Model (the key channels amplifying the protocol and its communities), and the Economic Model (the dynamics through which protocol players make money). Those elements coming together can serve as the basis to build and analyze a solid Blockchain Business Model.
In an asymmetric businessmodel, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus have a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility.
In an asymmetric businessmodel, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus having a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility. This is how attention merchants make monetize their business models.
While the term has been coined by Andrew Lampitt, open-core is an evolution of open-source. Where a core part of the software/platform is offered for free, while on top of it are built premium features or add-ons, which get monetized by the corporation who developed the software/platform. An example of the GitLab open core model, where the hosted service is free and open, while the software is closed.
Cloud business models are all built on top of cloud computing, a concept that took over around 2006 when former Google’s CEO Eric Schmit mentioned it. Most cloud-based business models can be classified as IaaS (Infrastructure as a Service), PaaS (Platform as a Service), or SaaS (Software as a Service). While those models are primarily monetized via subscriptions, they are monetized via pay-as-you-go revenue models and hybrid models (subscriptions + pay-as-you-go).
Open source is licensed and usually developed and maintained by a community of independent developers. While the freemium is developed in-house. Thus the freemium give the company that developed it, full control over its distribution. In an open-source model, the for-profit company has to distribute its premium version per its open-source licensing model.
The freemium – unless the whole organization is aligned around it – is a growth strategy rather than a business model. A free service is provided to a majority of users, while a small percentage of those users convert into paying customers through the sales funnel. Free users will help spread the brand through word of mouth.
A freeterprise is a combination of free and enterprise where free professional accounts are driven into the funnel through the free product. As the opportunity is identified the company assigns the free account to a salesperson within the organization (inside sales or fields sales) to convert that into a B2B/enterprise account.
A marketplace is a platform where buyers and sellers interact and transact. The platform acts as a marketplace that will generate revenues in fees from one or all the parties involved in the transaction. Usually, marketplaces can be classified in several ways, like those selling services vs. products or those connecting buyers and sellers at B2B, B2C, or C2C level. And those marketplaces connecting two core players, or more.
B2B, which stands for business-to-business, is a process for selling products or services to other businesses. On the other hand, a B2C sells directly to its consumers.
A B2B2C is a particular kind of business model where a company, rather than accessing the consumer market directly, it does that via another business. Yet the final consumers will recognize the brand or the service provided by the B2B2C. The company offering the service might gain direct access to consumers over time.
Direct-to-consumer (D2C) is a business model where companies sell their products directly to the consumer without the assistance of a third-party wholesaler or retailer. In this way, the company can cut through intermediaries and increase its margins. However, to be successful the direct-to-consumers company needs to build its own distribution, which in the short term can be more expensive. Yet in the long-term creates a competitive advantage.
The C2C business model describes a market environment where one customer purchases from another on a third-party platform that may also handle the transaction. Under the C2C model, both the seller and the buyer are considered consumers. Customer to customer (C2C) is, therefore, a business model where consumers buy and sell directly between themselves. Consumer-to-consumer has become a prevalent business model especially as the web helped disintermediate various industries.
A retail business model follows a direct-to-consumer approach, also called B2C, where the company sells directly to final customers a processed/finished product. This implies a business model that is mostly local-based, it carries higher margins, but also higher costs and distribution risks.
The wholesale model is a selling model where wholesalers sell their products in bulk to a retailer at a discounted price. The retailer then on-sells the products to consumers at a higher price. In the wholesale model, a wholesaler sells products in bulk to retail outlets for onward sale. Occasionally, the wholesaler sells direct to the consumer, with supermarket giant Costco the most obvious example.
The term “crowdsourcing” was first coined by Wired Magazine editor Jeff Howe in a 2006 article titled Rise of Crowdsourcing. Though the practice has existed in some form or another for centuries, it rose to prominence when eCommerce, social media, and smartphone culture began to emerge. Crowdsourcing is the act of obtaining knowledge, goods, services, or opinions from a group of people. These people submit information via social media, smartphone apps, or dedicated crowdsourcing platforms.
In a franchained business model (a short-term chain, long-term franchise) model, the company deliberately launched its operations by keeping tight ownership on the main assets, while those are established, thus choosing a chain model. Once operations are running and established, the company divests its ownership and opts instead for a franchising model.
Businesses employing the brokerage business model make money via brokerage services. This means they are involved with the facilitation, negotiation, or arbitration of a transaction between a buyer and a seller. The brokerage business model involves a business connecting buyers with sellers to collect a commission on the resultant transaction. Therefore, acting as a middleman within a transaction.
Dropshipping is a retail business model where the dropshipper externalizes the manufacturing and logistics and focuses only on distribution and customer acquisition. Therefore, the dropshipper collects final customers’ sales orders, sending them over to third-party suppliers, who ship directly to those customers. In this way, through dropshipping, it is possible to run a business without operational costs and logistics management.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
I selected for instance, “Reinassance” as the key area within the micro-target I’m picking to kick off my business distribution strategy.
