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Inside Google Business Strategy And Corporate Structure

When we think of Google, that’s easy to think of it as the most significant tech success of the last decades. Yet, Google isn’t only that. Google is the most significant tech, distribution and commercial success of the previous decades.

Indeed, the company managed to conquer the web and build an over a hundred billion a year turnover based on digital advertising alone based on a brilliant distribution strategy, built one deal at the time!

Considering it was a late mover, I believe that part of the secret for its success was the deals it managed to close, which allowed it to gain traction and traffic for years to come. As I pointed out in another article, the traffic acquisition cost strategy that Google put up over the years, allowed the company to create a sustainable business model that keeps making money today.

Before looking at the commercial deals that drove Google overall business strategy, I think it’s important to look at its mission.

Google’s mission

Google’s Founders in the IPO letter of 2004, started with:

Google is not a conventional company. We do not intend to become one. Throughout Google’s evolution as a privately held company, we have managed Google differently. We have also emphasized an atmosphere of creativity and challenge, which has helped us provide unbiased, accurate and free access to information for those who rely on us around the world.

And as highlighted in Alphabet annual report for 2018:

Many companies get comfortable doing what they have always done, making only incremental changes. This incrementalism leads to irrelevance over time, especially in technology, where change tends to be revolutionary, not evolutionary. People thought we were crazy when we acquiredYouTubeand Android and when we launched Chrome, but those efforts have matured into major platforms for digital video and mobile devices and a safer, popular browser. We continue to look toward the future and continue to invest for the long-term. As we said in the original founders’ letter, we will not shy away from high-risk, high-reward projects that we believe in because they are the key to our long-term success.

What business pillars have made of Google, the company we know today?

Google’s business strategy pillars

In the 2004 Founders’ letter, Page and Brin highlighted:

Sergey and I founded Google because we believed we could provide an important service to the world-instantly delivering relevant information on virtually any topic. Serving our end users is at the heart of what we do and remains our number one priority.

Thus, when we think of Google (the search engine) moving in a particular direction, we have to ask, “will this benefit users?”

For instance, in the publishing world, or in other industries where Google might have a massive impact, the companies involved start to ask “whether this is good for them” and complain about Google taking over a specific industry. However, they are pondering the wrong question.

Another aspect Google has focused since its inception (as a company) was the long-term, which – as specified in its IPO letter – meant:

You might ask how long is long term? Usually we expect projects to have some realized benefit or progress within a year or two. But, we are trying to look forward as far as we can. Despite the quickly changing business and technology landscape, we try to look at three to five year scenarios in order to decide what to do now. We try to optimize total benefit over these multi-year scenarios. While we are strong advocates of this strategy, it is difficult to make good multi-year predictions in technology.

Google’s dual-class voting corporate structure

As a tech company, Google was the first to have a peculiar structured, explained below by Page and Brin in their 2004 letter:

In the transition to public ownership, we have set up a corporate structure that will make it harder for outside parties to take over or influence Google. This structure will also make it easier for our management team to follow the long term, innovative approach emphasized earlier. This structure, called a dual class voting structure, is described elsewhere in this prospectus. The Class A common stock we are offering has one vote per share, while the Class B common stock held by many current shareholders has 10 votes per share.

This structure allowed, and it still allows control to Brin and Page, and it was a pivotal element to Google’s overall business strategy. At the same time, Google moved in this direction to emulate the corporate structure of other media companies:

While this structure is unusual for technology companies, similar structures are common in the media business and has had a profound importance there. The New York Times Company, The Washington Post Company and Dow Jones, the publisher of The Wall Street Journal, all have similar dual class ownership structures.

Now that we’ve looked at key elements of Google’s business strategy let’s dive into the deals that made it the company we know today.

Netscape deal: the first massive deal

MOUNTAIN VIEW, Calif. – October 4, 2000 – Google Inc., developer of the award-winning Google search engine, and Netscape Communications, a subsidiary of America Online, Inc., (NYSE: AOL), today announced that they have renewed their partnership under which Google will continue to provide the fall-through search technology to complement Netscape’s award-winning Open Directory Project (www.netscape.com). Netscape will also continue to feature Google as a Premier Search Provider as part of its popular Net Search Program, which helps Netscape users choose from a variety of different search tools available on the Web.

This is how Google announced the news back then.

What was the deal about?

First, it is worth to remember that Netscape at the time was the most successful and trafficked browser on the web. That might have been the period in which Netscape was the web. Indeed, most of the browser market was in its hands. It is important to notice that Google at the time had proved a reliable service for Netscape users, which made it easier to close that deal. Therefore, the product or service is always a key ingredient in a business deal success.

As pointed out at the time “Netscape was the first to realize the potential of Google’s cutting-edge search technology, and we are pleased to continue our relationship, which underscores our commitment to providing the best possible search tools to navigate the Web.“

AOL would later buy Netscape.

Google deal with Mozilla to keep getting search market shares

Google understood that if it wanted to have a sustainable business model, it needed a continuous stream of traffic so that it could monetize that traffic on its main asset, its search results pages. Yet back in the 2000s Google was still far from having its web browser, Chrome, which would be launched in 2008. In the meanwhile, if it wanted to dominate the market, it had to secure deals across the board of the browser market.

Mozilla was one critical piece of the puzzle and Google made it a good deal for them. Back then of the $61 million in royalties most came from Google’s deal:

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Source: Mozilla Independent Auditor’s Report

As pointed out on TechCrunch back then:

Mozilla,the organization behind the popularFirefoxweb browser, has extended its search deal withGooglefor another three years. In return for setting Google as the default search engine on Firefox, Google pays Mozilla a substantial sum – in 2006 the total amounted to around $57 million, or 85% of the company’s total revenue. The deal was originally going to expire in 2006, but was later extended to 2008 and will now run through 2011.

Guarantee the proper distribution to your product or service is a commercial war. Thus, you need to have a compelling offer. Google managed to secure the deal for years, thanks to its offer, which made up most of Mozilla revenues for years!

When Microsoft tried to steal AOL deal, Google went all in!

As we’ve seen one of the key deals that allowed Google a proper distribution success was Netscape. Yet, Netscape was acquired by AOL in 1998 for a staggering $4.2 billion. Back when AOL was the most popular portal on the web. Being there for Google was critical. Microsoft understood that, and it offered AOL a compelling deal:

Google has been the search engine on AOL for several years, but rival Microsoft Corp. made a bid to take its place, offering AOL hundreds of millions in cash annually if it dumped Google for MSN Search. But Thursday night in New York, Google presented Richard D. Parsons, chief executive of AOL parent Time Warner Inc., with a more lucrative proposal that gave AOL numerous ways to grow along with rapidly expanding online ad spending.

As reported on the Washington Post of the time battle between Microsoft and Google was quite fierce. Google relaunched the Microsoft offer with a deal that would be hard to refuse.

As pointed out by the Washington Post “Under the agreement, Google will remain the search engine on the AOL service for five years, and Google will give AOL millions of dollars of free advertising on the search engine to promote its network of Web sites.“

Also, “AOL also will get the exclusive right to sell online banner ads for Google. AOL will keep about 20 percent of the proceeds from those ad sales, while Google will get about 80 percent.“

To give you a bit of context of how critical this deal was, AOL at the time had  20 million subscribers and 110 million unique visitors per month. As part of the deal, Google also bought 5% of the company for a billion dollar.  

As pointed out on Google financials for 2006:

We rely on our Google Network members for a significant portion of our revenues, and we benefit from our association with them. The loss of these members could adversely affect our business.

To understand the importance of AOL for Google distribution success, “advertising and other revenues generated from America Online, Inc. (“AOL”) accounted for 12%, 9% and 7% of revenues, primarily through our AdSense program, in 2004, 2005 and 2006.“

A single deal, AOL, accounted for more than 10% of Google revenues in 2004. And this traffic wasn’t inexpensive neither. Indeed, throughout 2003-06 there was an increase in traffic acquisition costs ($135.5 million) primarily driven by advertiser fees generated through the Google AdSense program. 

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Google needed to become independent and start building up its distribution channel via its browser. While its toolbar was already available beginning in 2000, Google Chrome was yet to come. In the meanwhile, Google wanted to get more distribution capability to dominate the market!

Google deal with the once mighty Ask.com

In 2007 Google secured another essential deal with a search engine that at the time was quite popular, Ask.com. As pointed out on SEJ:

Yesterday Google and IAC (the parent company of Ask.com) extended their sponsored search and advertising agreement in a move which is worth an estimated $3.5 Billion to IAC over the next 5 years.

Microsoft stole AOL deal to Google when it was too late
Over the years Microsoft had tried to take several deals from Google, unsuccessfully. Finally, in 2016 Microsoft managed to secure a deal with AOL, for its search engine, Bing. At that point, the deal couldn’t do any harm to Google dominance over the search market!
Yet the fight for the conquest of distribution on the web isn’t over.

The battle over mobile traffic acquisition starts with the Safari deal

As users’ behaviors and habits of content consumption change, also the distribution strategy has to adapt. An effective distribution strategy built a decade before won’t work today. As reported by Fortune, “Google will reportedly pay Apple $9 billion in 2018 and $12 billion in 2019 to remain as Safari’s default search engine.”

Why does Google spend so much money to be Safari default search engine, when Google Chrome is the dominant player now?

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Source: gs.statcounter

The reason is Chrome is the dominant player on the desktop, not so on mobile. Today, though mobile is the most significant distribution opportunity and it has the highest potential!

Handpicked related articles: 

What Is a Business Model? 26 Successful Types of Business Models You Need to Know
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Who Owns Google? Under The Hood Of The Tech Giant That Conquered The Web
The Power of Google Business Model in a Nutshell
How Does Google Make Money? It’s Not Just Advertising!
Ok Google, Are You In Search Of A Business Model For Voice?
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The post Inside Google Business Strategy And Corporate Structure appeared first on FourWeekMBA.

What Is Cash Conversion Cycle? Amazon Cash Machine Business Strategy In A Nutshell

The cash conversion cycle (CCC) is a critical metric that shows how long it takes for an organization to convert its resources into cash. In short, this metric shows how many days it takes to sell an item, get paid and pay back suppliers. When the CCC is negative, it means a company is getting financed by its suppliers to run the operations.

There are three aspects to take into account the cash conversion cycle:

Days inventory outstanding
Days sales outstanding
Days payable outstanding

In other words, how long it takes for an item from when it sits in your inventory to when it is sold. How long it takes for you to cash the sale. And how much time you have to pay back suppliers.

Quick example: Imagine you buy from an online store (just like Amazon). You ordered an item and spent $50. You’ll get the item in 7 days. The online store has already collected the $50 and will ask the supplier to send it over to you within a week. But the store will pay the supplier only after 30 days. This means that now the store has $50 that can spend the next three weeks before the amount is due to the supplier. Those three extra weeks are crucial as the money could be spent to order other items and sell them with the same cash conversion cycle. 

Therefore when an organization learns how to use its cash conversion cycle appropriately, it can become a sort of cash machine business strategy to fuel the growth of the business.

I want to show you how Amazon uses a negative cash conversion cycle to generate extra liquidity to power up its business growth.

Related: How Amazon Makes Money: Amazon Business Model in a Nutshell

Don’t be fooled by Amazon meager net income

If you look at Amazon income statement, you’ll see that its net income is meager. In fact, as of 2016, it was almost 2.3 billion dollars compared to its total revenues of nearly $136 billion.

True, Amazon is a store, and as such it will have lower margins compared to other tech giants that operate in the advertising space (like Google or Facebook).

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As you can see Amazon net income in comparison to its revenues is 1.7%. It seems that Amazon primary business strategy is to be entirely aggressive in both pricing and service offering.

That is how it managed to disrupt a few industries along the way. But if its net income is so meager how’s the company generating cash to sustain the business?

Amazon and the cash machine business model

A cash machine pattern for generating additional cash starts by efficiently managing three aspects:

Days inventory outstanding (how long it takes before we sell that item we have sitting in the store?)
Days sales outstanding (how long it takes to get paid by our customers?)
Days payable outstanding (how much time we have before we are due to our suppliers?)

Amazon is quite successful in managing its cash conversion cycle. In fact, as of 2017, gurufocus.com reports that Amazon has a cash conversion cycle of -26.92! 

Amazon.com Inc’s Days Sales Outstanding for the three months ended in Dec. 2017 was 19.87.

Amazon.com Inc’s Days Inventory for the three months ended in Dec. 2017 was 35.27. 

Amazon.com Inc’s Days Payable for the three months ended in Dec. 2017 was 82.06. 

Therefore, Amazon.com Inc’s Cash Conversion Cycle (CCC) for the three months ended in Dec. 2017 was -26.92.

Source: Gurufocus.com

It practically means that Amazon has almost thirty days before payments are due to its suppliers, while it has already generated available cash for the business by selling items in its online store!

But how and when does it make sense to operate a cash generating business model? I believe there are four main aspects to take into account:

Trust from customers
Digitalization
Negotiating strength
Inventory

First, you need to be Trusted by customers

Before Amazon could become so efficient in managing its cash conversion cycle business strategy, it took years to become trusted by its customers. Today Amazon.com is one of the most popular websites on earth, where each day billions of people purchased anything:

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Data: Similar Web
 Digitalization makes it easier

With digitalization, it has become easier for online stores to manage their cash conversion cycle. For instance, think of the case in which you open up a store with a simple landing page. You don’t have anything down yet, but you start getting sales in.

Once an item gets pre-ordered, you can get it from a supplier and send it over to a final customer. In short, digitalization helps companies keep a more efficient inventory based on what customers order online even before they have it sitting in the inventories.

That is not an Amazon case. Amazon played the opposite business strategy: build giants super-organized inventories called Fulfillment Centers.

Fulfillment centers are the key to Amazon successful cash conversion cycle strategy

Amazon has been investing billions of dollars in automating and making more efficient its “fulfillment centers.” That, of course, helped the company to strengthen its cash conversion cycle:

Advantageous credits terms with suppliers

Another aspect is the company’s ability to negotiate convenient payment terms with its suppliers. If you’re able to stretch the payments agreement terms in a way that allows you to run your business on credit, it becomes easier to have excess cash to invest in the business operations growth. Just like Amazon has been doing in the last years.

Affiliate networks and programs

Another critical element of Amazon successful cash business strategy was built upon a network of publishers around the web, that in exchange for a referral to Amazon products could get a fee. This is the premise of affiliate marketing, on which Amazon has also built its fortune.

Summary and Conclusion

The cash conversion cycle is a crucial aspect of any business which success is based on short-term liquidity. When current assets minus current liabilities is positive, it means the company can generate extra cash from its operations.

If well managed the cash conversion cycle can become a sort of cash-making machine that generates additional liquidity for an organization.

Amazon can teach you just that. It doesn’t matter how meager your net income is. If you have the cash to run the operations, you can grow wildly!

Below a summary of how it all works:

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What Is a Business Model? 30 Successful Types of Business Models You Need to Know
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The Future of Google: The Curse of Engineers Become Advertisers
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How Does DuckDuckGo Make Money? DuckDuckGo Business Model Explained
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Amazon Case Study: Why from Product to Subscription You Need to “Swallow the Fish”
Why Is AWS so Important for Amazon Future Business Growth?

The post What Is Cash Conversion Cycle? Amazon Cash Machine Business Strategy In A Nutshell appeared first on FourWeekMBA.

Branding Strategies Examples to Grow Your Business

What do you think is the most valuable asset of the company? Your productivity? Employees? Whether you chose the first choice or the latter, it is undeniable that both are valuable. However, branding takes that position for so many reasons. Branding is an intangible asset which may not be directly turned into cash, but it carries great weight and influence to your business.

Not convinced? Look at those successful companies that have developed brand strategies which highlights everything they offer, from product development to customer services to their sales and marketing.

With that said, many businesses still fail to achieve, and worst, to build a reputable brand because frequently it is overlooked by business owners. Now that many are getting aware of the branding’s importance. Let’s look into some examples of the branding strategies that you might want to consider to help grow your business.

Purpose

Every brand has its promises to its consumers. But in a marketplace wherein budgetary vigilance is high and the consumer confidence is low, promises alone wouldn’t be a wise bet against other competitors, but instead, it would be defining your brand’s purpose.

Surely you have thought about things like why are you waking up every day to go work, right? This thought alone carries significant weight. Thus, your branding should be able to cater to this thought, basically speaking, it should serve as a differentiator between you and your competitors.

Take IKEA as an example which emphasizes their willingness to achieve more than just their product’s profitability wherein their vision is all about not only selling furniture but rather, to create a better everyday life. In a costumer’s perspective, this would be an appealing promise and purpose as it demonstrates their commitment to providing value beyond profits and sales.

Flexibility and Simplicity

In this fast-changing market, marketers should remain flexible to stay relevant and compete side-by-side with their competitors. On an advantageous note, this would give you the freedom to be creative and quirky with your advertisements.

Now, if you are thinking on how to be able to ride the tide, then you’re already one step ahead towards establishing your branding since flexibility enables you to adjust with your business’ environment which builds interest and distinguish your approach apart from your competitor.

Look at Simple’s mobile app for banking, as reported by the British Banker’s Association, the average UK banking customers view their financial standing via smartphone more than once a day. In this modern age where everything is simple, fast, and efficient a mobile app for banking is what we’ll surely go for—who wouldn’t, right?

Simple’s staying their brand on simplifying projects even further, which caters their target market—the millennials, which mainly values convenience, budget, and beauty. With this said, Simple’s brand has identified an apparent unmet need within the marketplace making their approach different from the rest of the competitors.

Emotional Approach

Look at Apple. This company might be the perfect example of how a brand utilizes emotions to create a connection with consumers which results in brand loyalty over time. Apple’s branding strategy mainly focuses on a simple yet clean design but has a desire to become a part of a lifestyle movement.

By creating a way for the consumers to have an opportunity to feel like they are a part of a larger group, Apple can position themselves as an obvious choice for smartphones. But why? How does emotional branding convince the market to buy a particular product?

Researchers Baumeister and Leary stated that people have a basic psychological need to feel intimately connected with other people, which is a significant part of human behavior. Another theory is from Maslow’s hierarchy of needs wherein belongingness is categorized as a human need.

Consistency

Consistency in your brand strategy is an effort in giving your brand a platform to stand on. It serves as a solid ground for your branding which contributes to brand recognition that fuels customer loyalty. The key to this strategy is to avoid any unnecessary things that are unrelated to the enhancement of your brands such as useless remarks or Facebook posts that would confuse your audience.

Take a look at Coca-Cola, as a result of their consistency, every element of its marketing works harmoniously which in return, made them one of the most recognizable brands in the world. Even on their social media accounts their marketing ads and quirky remarks are all in alignment with their purpose and brand.

Takeaway

Building a solid foundation for a business’ branding is often overlooked since business owners would mainly focus on the company’s logo, name, and placement of the company, which is also are essential elements in making a business successful.

However, don’t forget about how establishing a good ground for your brand drastically help in growing your business. As such, it is also important to remember your business’ signs and use it to your advantage like catching the potential customers’ attention through incorporating neon lights or being creative. One example is shield co artistic signs whose aim is to make your business stand out further from the rest of your competitors.

Guest contribution by Rebecca Nelson, a freelance creative writer. Her experience in digital marketing coupled with an interest in tech entrepreneurship makes her a fine contributor in the field of business and internet marketing.

Resources to get started with your business:

Business Strategy: Definition, Examples, And Case Studies
What Is a Business Model? 30 Successful Types of Business Models You Need to Know
What Is a Business Model Canvas? Business Model Canvas Explained

The post Branding Strategies Examples to Grow Your Business appeared first on FourWeekMBA.

What Is A Technology Adoption Curve? The Five Stages Of A Technology Adoption Life Cycle

In his book, Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers, Geoffrey A. Moore highlights a model that tries to dissect and represent the stages of adoption of high-tech products.

More precisely this model goes through five stages. Each of those stages (innovators, early adopters, early majority, late majority, and laggard) has a specific psychographic that makes that group ready to adopt a tech product.

Related: Business Strategy: Definition, Examples, And Case Studies

Why is the technology adoption life cycle useful?

There is a peculiar phase in the life cycle of a high-tech product that Moore calls a “chasm.” This is the phase in which a product is getting used by early adopters, but not yet by an early majority.

In that stage, there is a wide gap between those two psychographic profiles. Indeed, many startups fail because they don’t manage to have the early majority pick up where the early adopters left.

Understanding the technology adoption of a product helps you assess in which stage is a product and when the chasm is close how to fill the gap and allow the early majority to pick up the void left by the early adopters.

That void is created when the early adopters are ready to leave a product which is about to go mainstream. The market is plenty of examples of companies trying to conquer the early majority but failed in doing so, and in the process also lost the enthusiasts that made that product successful in the first place.

What are the stages of a technology adoption life cycle?

The stages of a technology adoption life cycle, it comprises five main psychographic profiles:

Innovators
Early Adopters
Early Majority
Late Majority
and Laggards

Innovators 
Innovators are the first to take action and adopt a product, even though that might be buggy. Those people are willing to take the risk, and those will be the people ready to help you shape your product when that is not perfect.
As they’re in love with the innovative aspect behind it, they are ready to sustain that. This psychographic profile is all about the innovation itself. As this is sort of a hobby for them, they are ready and willing to take the risk of using something that doesn’t work perfectly, but it has great potential.
Early Adopters 
Early adopters are among those people ready to try out a product at an early stage. They don’t need you to explain why they should use that innovation.
The early adopter has already researched into it, and she is passionate about the innovation behind that, however, while the innovator will adopt the high-tech product for the sake of the innovation behind it.
The early adopter will make an informed buying decision. In that stage, even though the product is only appealing to a small niche of an early adopter, it’s great and ready.
Those early adopters feel different from the early majority. And if you “betray them” they might probably leave you right away. That is where the chasm stands.

Early majority

The early majority is the psychographic profile made of people that will help you “cross the chasm.” Getting traction means making a product appealing to the early majority. Indeed, the early majority is made of more conscious consumers, that look for useful solutions but also beware of possible fads.

Late Majority 
The late majority kicks in only after a product is well established, have a more skeptical approach to technological innovation and feel more comfortable in the adoption only when a product has gone mainstream.
Laggards
Laggards are the last in the technology adoption cycle. While the late majority is skeptical of technological innovation, the laggard is adverse to it.
Thus, unless there is a clear, established an advantage in using a technology those people will hardly become adopters. For some reason, which might be tied to personal or economic aspects, those people are not looking to adopt a technology.
In which psychographic profile does your customers fall into? Did you cross the chasm yet? 

Other resources:

What Is a Business Model? 30 Successful Types of Business Models You Need to Know
What Is a Business Model Canvas? Business Model Canvas Explained
Marketing vs. Sales: How to Use Sales Processes to Grow Your Business
What Is Business Development? The Complete Guide To Business Development
Blitzscaling Business Model Innovation Canvas In A Nutshell
What Is a Value Proposition? Value Proposition Canvas Explained
What Is a Lean Startup Canvas? Lean Startup Canvas Explained
How to Write a One-Page Business Plan

Business Strategy: Definition, Examples, And Case Studies

The post What Is A Technology Adoption Curve? The Five Stages Of A Technology Adoption Life Cycle appeared first on FourWeekMBA.

What Is A Product Life Cycle?

The Product Life-cycle (PLC) is a model that describes the phases through which a product goes based on the sales of a product over the years. This model is useful to assess the kind of marketing mix needed to allow a product to gain traction over time or to avoid market saturation.

Why is the product life-cycle important?

Understanding which stages your product might be is critical to understand the kind of marketing mix to utilize to gain as quickly as possible traction and get to the growth stage.

Or if a product is already in the maturity stage, it helps marketers or managers to assess how to prolong the maturity phase and avoid market saturation.

Thus, with PLC managers and marketing strategist can make informed business decisions, by understanding which stage a product is going through. The primary phases of a product life cycle can be broken down in:

Introduction and development stage
Growth stage
Maturity stage
Decline stage

Related: Business Strategy: Definition, Examples, And Case Studies

Introduction and development Stage 

In this stage, a company will go thrugh a period of high costs that will be needed to sustain the development and introduciton of the product in the marketplace.

At this stage the sales volume is low, the investments costs are high, there is little or no competition, and demand has to be created by prompting customers to get the product.

Growth Stage 

A growth stage is characterized by strong sales, reduced costs, but also growing competition. As the public becomes more aware of those existing solutions, more players come into the market.

Usually to compete in this phase, companies lower up the price of the product, or undertake aggressive growth strategies to gain as much market share as possible.

Maturity Stage 

In the maturity stage, costs due to investment on the product are generally lower, due to high production volumes and sales volumes. In this stage, though sales volumes also peaked, at the point of market saturation.

When that happens, a price drop might occur due to competing products. Thus, also profits will be squeezed. At this stage what will allow a company to keep generating substantial revenue and retain market shares is branding and differentiation.

Decline Stage 

In the decline stage, due to market saturation, sales volume will decline, the profitability keeps diminishing. It is critical that a company gains back its marketshare.

Other resources

What Is a Business Model? 30 Successful Types of Business Models You Need to Know
What Is a Business Model Canvas? Business Model Canvas Explained
Marketing vs. Sales: How to Use Sales Processes to Grow Your Business
What Is Business Development? The Complete Guide To Business Development
Blitzscaling Business Model Innovation Canvas In A Nutshell
What Is a Value Proposition? Value Proposition Canvas Explained
What Is a Lean Startup Canvas? Lean Startup Canvas Explained
How to Write a One-Page Business Plan

Business Strategy: Definition, Examples, And Case Studies

The post What Is A Product Life Cycle? appeared first on FourWeekMBA.

10 Strategies To Bootstrap Your SEO

First of all, let’s talk about why you should still care about SEO in 2019.

A lot of marketers and bloggers nowadays refer to SEO, as an “old-school way” of doing things. They rather prefer Facebook, Instagram, Youtube or Influencer Marketing.

But, the truth is that SEO still has one of the highest ROI among all inbound channels.

Also, organic search results tend to perform 5.7 times better than paid search ads (in terms of conversions).

SEO is the cornerstone of driving evergreen traffic, and free evergreen traffic is one of the keys for making sustainable revenue online and to grow your business.

Bottom line: SEO is harder, for sure, but it is not dead.

So, let’s focus what top strategies to grow your site or blog with no, or very little budget are.

1. Setup WordPress

A proper tech setup – fundament for fast-growing SEO rankings and organic traffic.

If you have a limited budget – WordPress is a perfect choice. When your business grows at a later stage, you can move to either a custom WordPress theme or custom-build website. But, for a start – just go with WordPress and save a lot of time and resources.

WordPress is a recognized CMS leader, with a 50-60% share of the whole market.

Some major platforms, as well as publishers, work on WordPress, to name a few: CNN, Fortune, TED, TechCrunch and many more. See a great list of top WP sites here.

You can mount your WordPress with one click and have a website running in minutes.

2. Good host and WordPress theme

It is also important to choose a good-quality theme and host.

Choosing a high quality – and maybe pricey host – will certainly save you a lot of time and money in the future.

You don’t want your website to go down during high traffic spikes or just constantly have poor performance.

A premium WordPress host will provide you with:

One-click WordPress set up
SSL certification
Staging environment (where you can test ideas)
99.9%+ uptime
Technical assistance (either email, chat or call).

Several of my preferred WordPress hosts are – Bluehost, WpEngine, Kinsta.

Choosing cheap and poor quality often leads to hiring expensive WordPress developers, who need to write hundreds of lines of custom code to optimize your site.

Some common issues, which come with bad WordPress theme:

Slow website;
Low conversion;
Bad mobile experience;
Low uptime, a site is down during high traffic.
And much more.

There are excellent options in each category/niche, but some of my favorite themes are Divi, Genesis, Impreza.

3. Tech setup

Before going into attack with link building and content, it is also crucial to have tech SEO configured well.

One simple mistake can ruin months of effort.

Take care of:

sitemap, robots.txt,
Permalinks,
Redirects,
creating an account in Search Console,
tracking (using Google Analytics, GTM or Segment or Mixpanel),
image optimization,
mobile performance, AMP
caching, etc

In my own experience, with these “small things” set up correctly you can easily boost your organic traffic by 30%+ in a month.

4. High-quality content

Content is still king in SEO. Without high quality, original and engaging content – it will really hard to get any Google traffic at all.

If your average Session time is low and Bounce rate high – it means users are not wowed by your content and heading to exit from your site. That is a bad sign for Google, which will put this particular page down in search results.

In 2019 it is super hard to trick Google – don’t even try to steal content, spin content or order very poor quality articles from Fiverr – you risk to waste time and money.

5. Long forms

Instead of creating five short articles, create one long, ultimate guide.

Google will rank higher those articles, which provide a definitive answer to a search query, and from which users won’t need to go to another page.

It is also easier to build up UR (URL Rank) for one page than for many.

Long form can be anything in between 2000-10000 words. This kind of articles usually ranks for thousands of long-tail organic keywords and brings thousands of organic visits per month.

Also, high-quality long forms tend to attract a lot of backlinks.

6. Rich, engaging content

You need to “fight” for your high session time and low bounce rate.

Try to include a lot of visuals, videos, rich elements in your content – such as maps, infographics, animated infographics, podcasts, tables, quizzes, polls, and other interactive elements.

More interactive page -> more session time -> higher Google rankings -> more organic traffic.

According to Hubspot, including a video in post increase organic traffic by 157%.

Also, video content is staggering 50 times more likely to drive organic search results than just plain text.

This type of content will also bring you lots of referring domains.

7. Guest posts

The hard truth about SEO – it won’t work without active link building and outreach.

Guest posts are one of the most effective ways to build backlinks right now.

First of all, you need to research a list of sites in your niche, which accept guest posts.

Here are some Google footprints to help you.

Keyword in title: “write for us” (e.g., US travel in title: “write for us” )
Keyword in url: ”write for us.”
Keyword “submit a guest post”
Keyword “submit” AROUND(4) “guest post”
Keyword “guest post by”
Keyword “accepting guest posts”
Keyword “guest post guidelines”
Keyword “submit blog post”
Keyword “contribute to our site”
Keyword “submit article”
Keyword “guest author”
Keyword in url:“guest post”
In post author: “guest + post” Keyword
In post author: “guest + blog” Keyword

After that, you need to do an outreach campaign, asking for a guest post.

Use hunter.io to research emails and Mailshake to send tracked emails.

Or you can go with the all-in-one outreach tools, such as Buzzstream or NinjaOutreach.

You can use a template:

Hello,

Just found your nice blog …

I would be really happy to contribute a guest article.

Here are some ideas …

Take a look at some example of my previous work …

Looking forward to your reply.

Cheers, Andrew.

Always include follow-up emails (they do the job) – Mailshake or Buzzstream will help you with that.

8. Outreach

It is advisable to do outreach for every new post you publish.

For example, you just created a new blog “How to sell like a pro with Instagram: top 10 tips”. Go to Google, find related blog articles, create a list and do outreach campaign.

Hello Team,

Just found your blog about … (URL here), great job!

I recently put a similar article about … – (URL here).

If you find it useful or interesting to your audience, could you please mention it somewhere on your site or at least social media?

Also, are you accepting guest posts in this area? I would be happy to contribute.

Looking forward to your reply.

Cheers, …

And include 2-3 follow-ups, if there is no reply.

9. “Link hunting”

If you are starting a new bootstrapped SEO project, with a low or new budget – you should be in constant link hunting.

You need to grab every backlink opportunity and “fight” for every high-quality referring domain. For example,

Ask your customers to include links to your site;
Do your friends own sites? Ask them for a link;
Register in directories;
Think of an overreaching PR-strategy;
Register on some niche sites and platforms (with a backlink);
etc.

It is really crucial for a new site to reach 50 and 100 referring domains mark.

10. Patience

SEO is a long-term game.

A lot of beginners give up because SEO won’t provide real results in the first 3-5 months.

Even the fine-tuned SEO campaign will bring some tangible traffic after 7-8 months, at least. Usually, it is 2-5 years for a full-scale SEO project.

To sum it up

SEO is not dead, but it is becoming harder and even more competitive with every year, especially if you want to bootstrap your blog.

So, prepare for hard work, constant link hunting, hundreds of blogs and be patient.

Guest post by Andrii Gor – SEO enthusiast with 10+ years of experience. He specializes in keyword research, rank tracking and tech SEO. Check out his SEO blog – Online Hikes and tech publishing site – TechBuzr .

Read next: 

What is SEO Hacking? How to Steal Featured Snippets with These SEO Hacks
What Is a Business Model? 30 Successful Types of Business Models You Need to Know
What Is a Business Model Canvas? Business Model Canvas Explained
Blitzscaling Business Model Innovation Canvas In A Nutshell
What Is a Value Proposition? Value Proposition Canvas Explained
What Is a Lean Startup Canvas? Lean Startup Canvas Explained
How to Write a One-Page Business Plan

Business Strategy: Definition, Examples, And Case Studies

The post 10 Strategies To Bootstrap Your SEO appeared first on FourWeekMBA.

How to Find Freelance Content Writers For Your Business Website

You want your small business to become a brand.

You want visitors to recognize it, read its content, subscribe to your newsletters, and – sooner, rather than later – order from you.

For that, you work hard on crafting your business website. UX design, color psychology, UTP, and social proofs are all very well; and you already know who can help you with that.

But the most powerful weapon to communicate your brand message to consumers is… yes, it’s texts. Outstanding content that would engage people, translate your tone of voice, and encourage to buy is what you need right here and on a regular basis.

Savvy freelance writers would solve the problem.

Benefits are many: you save time and money, you don’t spend resources on workplace organization and training of full-time employees, and you get compelling content that drives organic traffic and works on your brand reputation.

But there’s also a reverse of the coin.

Looking for freelancers, you may face irresponsible performers who miss deadlines, ignore instructions, write poor texts, or disappear once they find a client promising to pay $1 more than you.

Outsource is about the interaction of expectations, collaboration, insights, and personal traits: as a small business owner, you want them to be cheaper and faster, while they want to write longer and sell texts higher.

To balance the process for a win-win, learn to work with freelance writers like a boss.

Where to look for freelance writers

Corresponding websites are many. Freelancer, Upwork, Guru, People Per Hour, Fiverr – each of them has own approach but the same essence: post a job description, start receiving proposals, compare candidates’ profiles as well as ratings, prices, and portfolios, and hire those fitting your expectations and business needs most.

Tip: don’t ignore freelancers living and working outside of US. They work just as well as native-speaking writers but may cost you less, so pay attention to professional background and experience rather than country.

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How to choose a freelance writer

Sad but true:

Most people believe they can write.

Indeed, five in ten are bloggers today, posting to Facebook or Instagram with hundreds of likes and shares, which inspires them to practice freelancing and earn extra money. 

Good luck to them; but when you come to find a professional who would create terrific content for your business website, you have to thread your way through the tons of their profiles… And you simply get lost there.

How to save your time, nerves, and money? How to understand what writer can deliver your business message, not just put words on paper?

Pay attention to these aspects:

A writer can meet deadlines.
A writer is creative, with own style and voice, but also adaptable i.e. able to follow your brand tine of voice.
A writer’s texts are thoughtful and well-researched.
A writer is flexible, able to deliver content when you need it or revise it according to your feedback.
A writer is accurate and attentive to details: he formats texts properly, avoid most common spelling and grammar mistakes, crafts content from scratch, and clearly understands what you want from him.

The questions gathered by Corey Wainwright at HubSpot will help you understand if a particular writer meets your business needs. Ask them before hiring.

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Source: clearvoice.com

How to organize your work with freelance writers

First and foremost:

Make it clear for a freelance writer what you want from him. In other words, craft guidelines right and avoid quirky mistakes while training a writer.

Details to include in guidelines:

Target. Tell a writer about your small business and its target audience, as it will help him create engaging content. Specify a type of content you need from a writer – informative, entertaining, or marketing. Also, explain what message it should communicate to the audience.


Task itself. Include information on formatting and visual elements: how to format headings, lists, citations; paragraphs length; what links to include if any; what words to avoid (if you have a brand style guide, share it with your freelance writer so he could understand your tone of voice better); experts and resources to refer; a deadline.


Comments. Share some content assets for illustrative purposes so a writer could see what you expect from him. Encourage to check a completed task for plagiarism to avoid duplications and unintentional rewrite. Give contacts of whom he could address for comments.

To save time and resources, organize your work with freelance writers effectively.

Work in Google Docs, as it’s among the best resources to access and manage fast.
Create a separate folder for your freelancer to save all texts.
Write a strategic plan and share its part about the content with a writer so he could see deadlines in advance and organize his time properly.
Create a separate doc with all formatting rules and guidelines so a writer could refer to it whenever needed.
Discuss payment details in advance; and plan deadlines smart: save some time for revision and edits.

Check the work of your content writers

Don’t forget to control your freelance writer’s work for better efficiency. How much time does he spend on one task? How many tasks does he complete within a definite period of time? How many are still pending a revision or already expired?

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Google Calendar and Google Sheets are free yet compelling tools to control a writer. Add tasks, change their status, leave comments for a writer to revise texts accordingly,  and analyze their working efficiency with formulas.

Also, you might want to try a specific software, developed for business campaigns management. It analyzes completed tasks, grades them, regulates communication processes, generates reports, calculates expenses for every writer, and more.

Once organized, working with freelance writers will save you tons of time and costs. And nerves, which is sometimes worth more than monetary rewards, isn’t it?

Guest contribution by Lesley Vos, a content strategist, and writer from Chicago. She’s currently associated with Bid4Papers.com blog posts but also contributes to many publications as a freelance writer. Find more works at @LesleyVos on Twitter.

Read next: 

What is SEO Hacking? How to Steal Featured Snippets with These SEO Hacks
What Is a Business Model? 30 Successful Types of Business Models You Need to Know
What Is a Business Model Canvas? Business Model Canvas Explained
Blitzscaling Business Model Innovation Canvas In A Nutshell
What Is a Value Proposition? Value Proposition Canvas Explained
What Is a Lean Startup Canvas? Lean Startup Canvas Explained
How to Write a One-Page Business Plan

Business Strategy: Definition, Examples, And Case Studies

The post How to Find Freelance Content Writers For Your Business Website appeared first on FourWeekMBA.

15 Financial Ratios Formulas To Analyse Any Business

These are the most important financial ratios formulas you can use to analyze any business:

current ratio
absolute ratio
quick ratio
the accounts receivable turnover ratio
the accounts payable turnover ratio
inventory turnover ratio
debt to assets ratio
debt to equity ratio
interest coverage ratio
gross profit margin ratio
operating profit margin ratio
return on capital employed ratio
return on equity ratio
Earnings Per Share
Price/Earnings Ratio

What is a current ratio?

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What is a quick ratio?

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What is the absolute ratio?

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What is the accounts receivable turnover ratio?

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What is the accounts payable turnover ratio?

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What is the inventory turnover ratio?

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What is a debt to assets ratio?

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What is a debt to equity ratio?

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What is the interest coverage ratio?

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What is a gross profit margin?

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What is an operating profit margin?

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What is a return on capital employed?

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What is the return on equity?

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What is the earning per share ratio formula?

This is given by:

(Net Income – Preferred Dividends) / Weighted Average Number of Common Shares

What is the price/earnings ratio formula?

This is given by:

(Net Income – Preferred Dividends) / Weighted Average Number of Common Shares

Read Next: 

The Three Most Important Financial Ratios for the Manager
What Is a Financial Ratio? The Complete Beginner’s Guide to Financial Ratios
What Is the Inventory Turnover Ratio? How Inventory Efficiency Can Fuel Business Growth

Resources for your business: 

What Is a Business Model? 30 Successful Types of Business Models You Need to Know
What Is a Business Model Canvas? Business Model Canvas Explained

The post 15 Financial Ratios Formulas To Analyse Any Business appeared first on FourWeekMBA.

The Hacker Way: Inside Facebook Business Strategy

To have an understanding of Facebook business strategy, it is essential to go back to Mark Zuckerberg‘s Founder’s Letter of 2012, to look at the key elements of Facebook‘s vision, mission, and key pillars.

It is important to notice that while Mark Zuckerberg emphasized this letter back in 2012, Facebook isn’t anymore one of the fastest growing tech startups. But one of the largest tech companies.

[image error]In the first nine months of 2018, mobile advertising was estimated at 92% of the total advertising on Facebook products. Active monthly users decreased from 376 million to 375 million in Europe. In the US and Canada, users increased from 241 million to 242 million. At the same time, average revenue per user grew worldwide. Besides all the buzz of 2018, the Facebook business model seems (for now) unshakable.

This is an attempt to analyze the key elements of Facebook business strategy. It is not an attempt to judge whether or not the Facebook business model is good or bad.

By default, I don’t think there is an intrinsically lousy business model. What might make it go awry is the scale of that model, and the fact that might relies too much on a single monetization strategy, even when it reaches a massive scale.

Let’s dive into the key elements of Facebook business strategy.

Facebook vision and mission
As Mark Zuckerberg pointed out in its Founder’s Letter:

Facebook was not originally created to be a company. It was built to accomplish a social mission — to make the world more open and connected.

It’s hard to believe, yet, back in the days, when Mark Zuckerberg launched what would become The Facebook, even after being widely successful, he wasn’t convinced at all that was a business to pursue.
What did inspire Marck Zuckerberg to launch Facebook?

At Facebook, we’re inspired by technologies that have revolutionized how people spread and consume information. We often talk about inventions like the printing press and the television — by simply making communication more efficient, they led to a complete transformation of many important parts of society. They gave more people a voice. They encouraged progress. They changed the way society was organized. They brought us closer together…

While this statement is inspirational, it does tell us that for a business strategy to be successful, being inspired by great, and seemingly unachievable things it can be a great enhancer. At the same time, you have to break down this mission, at a small scale, so that you also make it actionable.
As March Zuckerberg continued in the letter:

…Even if our mission sounds big, it starts small — with the relationship between two people.

Thus by moving from “changing society” to improving relationships between to people, that allows Facebook to design its tools, by having a simple metric.
Facebook’s growth framework

In another part of the letter Mark Zuckerberg highlights another critical aspect, and also one thing that I try to stress over and over:

Most great people care primarily about building and being a part of great things, but they also want to make money.

In the business world often people seem to fear to admit they are in for the money. While making money isn’t the primary element, people still see it as an important aspect of doing business.
That’s because as a company, making money is itself a signal that helps you understand whether you’re building things people love.

Through the process of building a team — and also building a developer community, advertising market and investor base — I’ve developed a deep appreciation for how building a strong company with a strong economic engine and strong growth can be the best way to align many people to solve important problems.

Building up a successful business isn’t a simple task. And it requires the combination of several key elements. In the software world, without a strong developer community behind, it becomes very hard to be sustainable.
At the same time, you need to be able to build a strong economic engine, which in Facebook’s case, turned out to be its advertising business. That of course, attracted a solid investor base, since the start.
Understanding the hacker way

The Hacker Way is an approach to building that involves continuous improvement and iteration. Hackers believe that something can always be better, and that nothing is ever complete. They just have to go fix it — often in the face of people who say it’s impossible or are content with the status quo.

One of the elements that most identified Facebook’s culture since the beginning was its “hacker way.” This is explained above, and it also carries a few other ingredients.


The hacker way requires quick releases but also making sure to learn from fast iterations, so that the software released can get better and better, and improve exponentially. As Mark Zuckerberg pointed out at the time “done is better than perfect.”
And according to him, a hacker doesn’t spend days discussing ideas. Rather it prototypes and tests to see if it works. Back in the days (not sure if that is still used) at Facebook the say “code wins arguments,” got used over and over.

It is important to remark that this hacker way was born in the software world, and it thrived in the digital economy. That’s because in the bits world, by definition, releasing something might carry a lower cost, when done at smaller scale.

However, as a company grows, and it acquires scale, it is vital that it moves away from a minimum viable product to an exceptional viable product.

Indeed, the hacker mindset it might be critical to challenge the status quo. But when you’ve become the status quo, the cost that a failed product might have on your brand might be greater than the benefits of iterating that product with its users.

That is also why in one way Facebook moved from “move fast and break things” to “move fast with stable infrastructure.” The cost of making mistakes increases exponentially with scale. And cleaning up after the mess created by a failure might be too large to deal with.

Conclusions and the pillars of Facebook’s business strategy

To conclude, Facebook business strategy pillars move around five key elements:

Focus on impact
Move fast
Be bold
Be open
Build social value

While these pillars remain important on Facebook overall strategy, they might have also changed along with Facebook massive scale and growth.

Related to Facebook:

How Does Facebook Make Money? Facebook Hidden Revenue Business Model Explained
How Mobile Advertising Is Driving Facebook Growth
Visualizing Facebook ARPU Over The Years And Why It Matters
The Advertising Economy: Inside Facebook Money-Making Machine

Other case studies: 

What Is a Business Model? 30 Successful Types of Business Models You Need to Know
What Is a Business Model Canvas? Business Model Canvas Explained
Blitzscaling Business Model Innovation Canvas In A Nutshell
What Is a Value Proposition? Value Proposition Canvas Explained
What Is a Lean Startup Canvas? Lean Startup Canvas Explained
How to Write a One-Page Business Plan
How to Build a Great Business Plan According to Peter Thiel
How To Create A Business Model
What Is Business Model Innovation And Why It Matters
What Is Blitzscaling And Why It Matters
Business Model Vs. Business Plan: When And How To Use Them
The Five Key Factors That Lead To Successful Tech Startups
Business Model Tools for Small Businesses and Startups

Other resources:

The Power of Google Business Model in a Nutshell
How Does DuckDuckGo Make Money? DuckDuckGo Business Model Explained
How Amazon Makes Money: Amazon Business Model in a Nutshell
How Does Netflix Make Money? Netflix Business Model Explained
How Does Spotify Make Money? Spotify Business Model In A Nutshell
DuckDuckGo: The [Former] Solopreneur That Is Beating Google at Its Game

How Does Facebook Make Money? Facebook Hidden Revenue Business Model Explained

The post The Hacker Way: Inside Facebook Business Strategy appeared first on FourWeekMBA.

What Is a Business Model Canvas? Business Model Canvas In A Nutshell

A business model is a way in which organizations capture value. Not only the economic value but also the social values an organization can foster and the cultural values it can sustain in the long run.

In other words, generating a business model isn’t just about how companies make money but how they create value for several players. Unlocking profits for the organization that came up with that business model is one of the critical elements.

There isn’t a single way to design and assess a business model. However, the business model canvas is a holistic model that takes into account nine factors or building blocks.

Alexander Osterwalder proposed the Business Model Canvas.  He’s a  Swiss business theorist that in 2000 together with a team of 470 co-creators in an attempt to create a tool that entrepreneurs could use for their businesses.

The aim of having a sharp understanding of your business model is critical to provide strategic insights about your customers, product/service, and financial structure.

Thus, to take action and iterate the business model until it unlocks value for your organization as a whole.

Let’s take a real case study. I often mentioned the Google business model as a great example. You might like or not the giant from Mountain View.

Yet what made this company so profitable – I argue – was its ability to unlock value for several players in the digital marketing space.

In fact, on the one hand, with AdWords, Google allowed businesses to transparently bid on keywords based on the clicks those ads received.

This allowed companies to disintermediate advertising from intermediaries that were taking up most of the margins (of course now Google gets them).

On the other hand, with AdSense, Google allowed small publishers around the world to monetize their content. All they needed was an AdSense account and enough traffic to start earning money.

Of course, as of today, this model isn’t sustainable anymore for many businesses. In a way, AdSense democratized the ads revenues, which before were only taken by large players. With Google, those profits got shared with content creators.

Also, Google offered the best search experience compared to any other search engine.

Even though it wasn’t the first to take over the market (it was actually among the last movers) Google offered a free service that worked wonders.

The focus on a great search experience was one the most crucial factor in Google‘s success.

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Little critical note: Just like professors study birds flight and go around the world to teach birds how to fly while they can’t. So entrepreneurs that tinker on a daily basis with business models might have a better feel for that compared to theorists trying to teach them what a business model is. In short, my point is that you don’t need to get bogged down on its definition or to stick with the business model canvas to assess your business model. You might want to develop your way to look at your business as – if you’re an entrepreneur – there’s none better than you to do that. In short, use the business model canvas as one of the many methods you can use to assess your business. Don’t let professors or theorists tell you that is the only way. It’s not. At the end of this guide, we’ll see a few alternative tools you can use to assess, and design your business model.

Going back to the business model canvas Alexander Osterwalder, outlined several prescriptions which form the building blocks for a business model.

Those building blocks enable entrepreneurs to focus on operational, strategic, and financial assessments of their business.

What Is a Business Model? 30 Successful Types of Business Models You Need to Know

Business model canvas in a nutshell

The nine building blocks of the business model canvas comprise vital partners, key activities, value propositions, customer relationships, customer segments, critical resources, channels, cost structure, and revenue streams.

Key partners

Who are your key partners/suppliers?

What are the motivations for the partnerships?

It all begins with your partners. If you don’t have the right partnerships in place, you don’t have a business at all. That is the starting point of your business model. Finding the right partners is critical.

The success of your business and the traction depend upon your ability to identify and offer your partners a compelling reason to do business with you.

For instance, if you think about Google, the principal partners are the small publishers part of the AdSense program, together to the businesses that are part of the AdWords network and the users that daily keep going back to the Google search box by giving it critical data to sustain its business model.

If you think about Uber instead, you’ll notice how the key partners are its drivers for which Uber means an additional if not a full-time income as self-employed. Its engineers that keep the platform smooth and running and people that sustain the cause of Uber.

If you think instead at Airbnb, you’ll notice that those key partners aren’t only hosts and travelers that transact each day on the platform. Also, freelance photographers that travel the world to take professional pictures that enrich the user experience of Airbnb are also key players.

When it comes to partners “who” and “why” are critical questions. In short, who’s the niche of people that can sustain your business? And why, so what compelling reason are you giving them? What value do they get from this partnership? It doesn’t have to be just in terms of finances.

Of course, initially, a better deal would do. But it could also be about social values or personal values. For instance, initially for its drivers, Uber didn’t mean right away full-time income. But it also meant more freedom for its drivers to work when they wanted. So initially freedom might have been a critical aspect.

Key activities

What key activities does your value proposition require?

What activities are important the most in distribution channels, customer relationships, revenue stream…?

As innovationtactics.com explains, critical actions for Uber were: 

Remove friction from all interactions
Scale driver and customer side to reduce idle times for drivers and waiting times for customers
Reduce negative externalizes, e.g., bad behaviors on both sides
Grow the platform by getting more participants joining
Keep participants engaged and stimulate ongoing participation
Continue improving the value proposition, e.g., cheaper rides for regular commuters through UberPOOL
Look out for complementary value propositions (e.g., car financing, new customer segments, etc.)
Deliver on the customer proposition
Reduce churn (esp drivers)
Expand to more cities (US and global)
Analyze the data to fine-tune everything
Enhance technological lead and intellectual property to steepen barriers of entry

In short, those are the activities needed to make your value proposition compelling for your key partners. Thus, they can vary from removing friction (think of a marketplace that is hard to use), add features or make transactions smooth.

In short, the more your organization acts as an enabler of business relationships among several players the more its value proposition consolidates. Thus, anything that solves a customer problem, or satisfies an unfulfilled need would do.

Based on my personal experience from the case studies I’ve looked at the more the value proposition can adapt to several players needs the more it makes a business model become the driver for an organization growth. Take Quora:

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The Q&A social network can bring together several partners (users, writers, top writers, publishers/online businesses, and investors) with different value propositions; all met on the same platform.

Value proposition

What core value do you deliver to the customer?

Which customer needs are you satisfying?

Although the value proposition is not listed as the first element. In reality, this is the first thing you should assess. I’d say this is the foundation of your business model. That is what keeps the blocks together.

Without knowing the core values for your customers or partners and what needs you’re satisfying, or what problems you’re solving for them you might have a product but not a business.

This is connected with the previous building blocks and with the next ones. This is the glue that keeps it all together. As explained in the last point a value proposition doesn’t have to be for only one player, partner or type of customer.

Take the case of a multi-sided platform like LinkedIn. The value proposition can embrace both sides of the marketplace:

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The value proposition isn’t marked in the stone, but it can change over time. As new partners join; and as you tinker with your business model and as new unforeseen needs come about your value proposition might also change.

Customer relationship

What relationship that the target customer expects you to establish?

How can you integrate that into your business in terms of cost and format?

Based on the identified partners and customers you need to assess how to manage those relationships to keep them aligned with their expectations and within your business model.

If you take Uber, as specified by innovationtactics.com it needs to consider four elements to manage their customer relationships. 

(1) the customers(=riders),

(2) the drivers,

(3) the broader public and

(4) regulators.

Each of those relationships will have different dynamics. For instance, drivers might be concerned about safety risks while regulators might be worried about transparency and proper data management.

Another example, if you take the Airbnb business model, hosts are critical to the success of the platform, and concerns like liability coverages are essential for them to keep using it.

That is why hosts are provided with insurance and liability coverage, the “Host Protection Coverage” (of course that might have happened because of some accidents).

How Does Airbnb Make Money? Airbnb Peer To Peer Business Model In A Nutshell

Customer segment

Which classes are you creating values for?

Who is your most important customer?

Once you have the previous building blocks in place, it shouldn’t be hard to define for which class of people you’re creating value and what are your most important customers.

It is important to stress that although this is a list of blocks, it is not necessarily meant to be read or assessed in order. In fact, at times you might have some blocks but miss others.

For instance, let’s take the case of a startup that has created an innovative software based on new, emerging technologies. The startup founders might know for sure that technology is valuable and it will open up market opportunities.

Yet that same founder might not have a clue about who the potential customers might be. This shouldn’t surprise you. Starting up a business doesn’t necessarily mean to start from a problem people have.

That is true in more traditional industries. In tech, the opposite might apply. You have new technology and a product that does many things.

However, you struggle to have that business take off. How to find your customers? Often they will come to you as the interactions with the first customers become more intense. You’ll also refine your service to make it more focused on specific features and needs.

That process of iteration will bring you to the so-called “product-market fit.” This process can be at times painful and time-consuming.

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Source: startup-marketing.com
Key resource

What key resources does your value proposition require?

What resources are important the most in distribution channels, customer relationships, revenue stream…?

As we’ve seen the value proposition is the glue that keeps all the blocks of your business model together. Thus, it is critical to assess what financial and human resources to allocate to allow your value proposition to keep your business model going.

For instance, on Airbnb, it is critical to continue growing the offering and the quality of it to give more and more options to travelers. Also, Airbnb has noticed users wanted more experiences. It started to offer a whole new section focused on those experiences.

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Distribution channel

Through which channels that your customers want to be reached?

Which channels work best? How much do they cost? How can they be integrated into your and your customers’ routines?

A Peter Thiel might say if you don’t have a distribution you don’t have a product. As engineers are running many successful tech companies, it’s easy to get deluded by the fact that engineering alone can generate a successful business model. This is false!

The business world is a competitive environment. It doesn’t matter if you’re technically skilled if you don’t have the guts to take action in critical moments your business might well sink with your technical skills.

If you take Bring and Page, Google‘s founders, they are engineers, but they are businessmen.

When Google paid  $300 million for keeping its search engine as default choice within Mozilla, when Microsoft was about to steal it, it was an aggressive move to keep one of the most important distribution channels (at the time).

Microsoft was trying to have Bing featured as default choice of Mozilla. When Google’s founders understood what was happening, they didn’t stop thinking for a second. They didn’t build algorithms to make that decision. They acted out of their guts feelings.

If I had to name what’s the most important asset of any company, the distribution would come first. Finding the distribution channels that best fit your business isn’t a natural process. Traditional channels are word of mouth, paid marketing and media coverage.

In the digital business world instead, there are channels like SEO, social media and content marketing. I know you might look at them as marketing tactics and they are. However, those are meant to build distribution channels.

For instance, content can be used as a way to connect with key players in your industry that you’d want to have as business partners. Google can also act as a “distributor” as with a proper SEO strategy can bring a continuous stream of qualified traffic to enhance your business and so on.

Gabriel Weinberg, the author of “Traction” and founder of DuckDuckGo, a search engine that doesn’t track you, has identified 19 channels you can tap into to grow your business.

Zero to One: Sales and Distribution Lessons from Peter Thiel

Cost structure

What are the most cost in your business?

Which key resources/ activities are most expensive?

In the business community often growth is confused for profitability. That is not the case. Many companies that achieved staggering growth rates have failed to be profitable.

This isn’t necessarily bad, but a successful long-term business needs to become profitable as soon as possible. When Google opened its hood in 2004 after its IPO, the numbers were staggering. In terms of growth, revenues, and profitability.

A cost structure is then crucial to allow sustainable long-term growth.

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Generally speaking, your customer acquisition cost has to be lower than the lifetime value of your customers. Easy said than done. This connects us to the next, critical building block, the revenue stream generation.

Revenue stream

For what value are your customers willing to pay?

What and how do they recently pay? How would they prefer to pay?

How much does every revenue stream contribute to the overall revenues?

Until you don’t have a stream of revenues coming in you can’t say you have a business. This might seem a trivial point. Yet the way you monetize the company will also affect the overall business model.

There isn’t a single way to generate revenues. You might choose a subscription business model, a freemium, a fee or membership model. That also depends upon the industry, product, and service you offer.

For instance, Facebook uses a hidden revenue generation model.

In short, the utterly free platform in a way “hides” to its users the way it monetizes. Of course, businesspeople and marketers are well aware of how Facebook makes money as it has been so far a proper advertising channel for many businesses.

However, the average user doesn’t have a clue. Things are changing now that privacy issues and new regulations have brought attention to the Facebook, business model.

Yet for a decade Facebook has benefited from a vast stream of revenues and high profitability without most users ever noticing it.

How Does Mark Zuckerberg Make Money? Facebook Hidden Revenue Business Model Explained

Many might argue that the hidden revenue generation model is the most powerful. And in fact, it has proved so (Google is another example).

Indeed, as Peter Thiel remarks in his book, Zero to One, sales works best when hidden. As none likes to be reminded of being sold something. However, a business model that works, in the long run, needs to be aligned with users’ interests.

Thus, the way you monetize isn’t only about the bottom line but also about the kind of organization you’re building. If the revenue streams you generate provides value and is in line with your users’ interests, there is no need for corporate slogans like “don’t be evil.”

What more? Once you’ve found a revenue stream the works and is in line with your business model you can’t stop there. You need to keep experimenting with new revenue models.

In short, the business model canvas is the starting point for your business, rather than the ending point of your entrepreneurial journey.

Google business model canvas case study

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So far we’ve seen how a business model canvas is a framework to design a company’s business model. At the same time that can be used as a tool to dissect, understand others’ companies business models and how they are positioned in the marketplace.

In this article, we’ll look at the Google business model canvas. Keep in mind that the business model canvas is just one of the frameworks you can use to build, design or assess a business model.

Also, a business model canvas will capture where a company is or where it will want to be in the future. Thus, we’ll look at where Google business is at the time of this writing.

While a business model does create a long-term competitive advantage, being able to innovate it over time is critical. If Google itself doesn’t want to be disrupted, it will need to evolve its business model.

This might imply a complete change in a few years on a few things that comprise its business model according to the business model canvas like key partners, distribution channels and customer relationships.

While the vision of a company might stay the same, other things like value proposition might change substantially.

Google key partners

Each day billions of people get online, and they “google things up.” For many of those people, Google is de facto the web. Yet it hasn’t always been this way. There was a time, back in the late 1990s when the web was called AOL.

Indeed, probably more than half of the traffic on the internet went through this portal. When Google launched, while it had figured a great product and search engine, it didn’t have a business model yet.

For instance, by reviewing some of the thoughts of Google founders Page and Brin, it seems clear that they thought advertising wasn’t well suited for a search engine:

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In the paper, they pointed out their “mixed feelings” about the advertising business model. As they believed any search engine based on the premise of advertising in a way went against its primary mission.

However, over time Google figured a way to show advertising in a way that would not affect user experience.

Since the beginning traffic going through Google’s digital properties (its search pages) has been a critical ingredient for its long term success.

 That is also why initially Google made a deal with AOL to be featured as a primary search engine on its portal, which gave it massive visibility. 

AOL on its hand was offered such a good deal, and it also saw search as a secondary feature, that it couldn’t say no to Google. Therefore, while we give for granted the billions of queries – that each day – go through Google.

We miss the fact that Google had to build up a vast distribution network that each day guarantees it this traffic. This isn’t a simple network, but rather a massive infrastructure worth billions of dollars each year.

How does this infrastructure look like? There are a few elements:

Partnership agreements

One example is the multi-billion dollar deal with Apple to have Google featured as a default search engine on Safari. Traffic doesn’t come from thin air; it comes from physical devices.

As the web has shifted from desktop to mobile devices, Google has developed its distribution strategy (for instance via Google Chrome).

However, a vast array of devices (take iPhones or iPads) are operated by Apple IOS operating system and its internet browser (Safari). To be featured on those devices Google pays a substantial amount of money.

Open handset alliance

As pointed out above mobile users have grown massively in the last decade. This implies that whoever takes hold of the mobile content consumption can build a sustainable business model for years to come.

With other 84 technology and mobile companies, Google forged the Open Handset Alliance. In fact, in 2005, Google acquired Android (what would become the prevailing operating system for mobile).

Just after a few months from the launch of the iPhone by Steve Jobs, Google announced its Open Handset Alliance. The aim was to build “the first truly open and comprehensive platform for mobile devices.”

The business model behind the Open Handset Alliance is a simple one. Google provides its free of charge, the operating system for mobile devices, Android, and in exchange for many apps, like Google Play and Google Chrome come pre-installed.

AdSense network

It wasn’t just traffic the critical ingredient for Google success. It could offer relevant and high-quality content compared to any other portal, or search engine.

On the one hand, Google had figured out how to offer relevant ads by introducing AdWords with its quality score.  On the other hand, it needed to balance that with high-quality organic content from the web.

While Google did offer that by indexing the entire visible web, it managed to improve quite a lot when it offered to any publishers (independently from their brand) the possibility to monetize their content via the AdSense network.

Comprising millions of websites around the world; those websites allow Google to tap into their sites to place banners from businesses that want to advertise their services. Google shares the advertising revenues generated from those banners with these publishers.

Webmasters

A great payoff of Google is its ability to send qualified traffic to any site, based on searches people perform. For instance, if I search for “car insurance” on Google, I will find a few text-based ads on top of its search results.

At the same time, I’ll also find may other organic results, that didn’t pay a dime to be featured there. This is possible because Google has a massive index of the web, and if that content is relevant, it will be featured on Google’s first page.

Being on Google’s first page might turn in substantial income for those sites able to rank through it. In particular, web owners can submit their website via Google Search Console (a platform to monitor the indexing of a site) to control how Google sees the site.

This allows publishers – independently from being part of Google AdSense – to “control” their rankings vis Google organic search engine. Millions of webmasters each day help Google index their content, and make it easier for the search engine to keep a qualified index of the web!

Google key activities

Google mission is to “organize the world’s information and make it universally accessible and useful.”

This bold vision requires Google keeps innovating in the search industry, while it also looks forward to new ways the web is developing. From voice search, visual search, machine learning and more.

Google needs to invest first of all in a robust and secure infrastructure that makes it possible for the company to handle each day billions of queries. This implies a few key activities:

At a basic level, Google has to keep innovating its search algorithms. This alone requires substantial investments.
As voice search is growing it is critical that Google keeps innovating by also offering new products. For instance, Google launched its new voice devices, such as Google Home, which compete against other tech giants, like Amazon‘s Alexa and Cortana.
Google still generated most of its revenues from advertising. A business model based on a single source of revenue might not be sustainable in the long run. That is also why Google is investing resources in betting in other areas that might lead to the next innovation.

Google’s value proposition

For a tech giant like Google, which has a sophisticated business model, based on a hidden revenue generation, there isn’t a single value proposition.

Instead, several value propositions will serve the purpose of keeping key partnerships that allowed Google to scale up and let it today to maintain its market dominance. Thus, if I had to summarize the fundamental value propositions those would be:

The value proposition for billion of users

Free search engine for billions of users around the world. This is how Google managed to grow quickly. A great, reliable and free service that allowed users anywhere in the world to find the information they needed, fast.

Tools and productivity apps

Besides its free search engine, Google also offers a set of free tools and apps (to mention a few: Gmail, Google Analytics, Blogger, Google Books, Google Chrome and many others). Those free tools are among the most used in the business world.

Google advertising business

The core of the Google business model is advertising, focused on targeted text-based ads for businesses offered via the AdSense network.

Before Google existed,d there was no way for marketers to know in details all the conversion metrics of their ads. While Overture was the first in offering CPC advertising, Google managed to scale it up at massive levels.

Google AdSense

Before Google disrupted the advertising world and took over the digital advertising market, a few established publishers could make money via advertising.

With its AdSense network, Google also allowed small publishers to monetize their content. 

In a way, it was a democratization of the digital advertising market, where anyone with the content that got the most eyeballs and attention could monetize on it, independently from its brand.

Google AdSense is still an essential element of Google value proposition.

Google customer relationships

The cash cow for Google is its AdWords network, made of a growing number of businesses looking to sponsor their products and services. That implies two things.

First, Google needs to keep offering targeted ads that allow those businesses to generate leads. Second, Google is as worth as much as the qualified traffic it can generate.

This implies that Google needs to keep focusing on making sure that users go back to its search results pages. Indeed, even if users do not pay for Google search results, they are the products.

As any attention merchant, Google is selling back their attention. That means Google will need:

Salesforce able to support AdWords (now Google Ads) businesses

Offer the proper support to businesses part of the AdWords network requires a substantial investment in business development people able to expand the list of companies that join Google’s advertising network. This implies local initiatives, training, and support to those businesses.

Privacy

Companies like DuckDuckGo have built their business on Google weakness in terms of privacy. If those concerns are not addressed Google might be losing an increasing chunk of users, willing to switch because of privacy concerns

Google customer segments

In terms of value creation, with its massive business model, Google has several “customers” not intended only to businesses paying Google for service but also those people or organization that contribute to Google financial success. In that respect we have:

Free internet users

Internet users around the globe. Even though Google is a free service, Google‘s users are among the most important “customers.” If Google lost them, there would be no business at all.

Agencies, marketers, and businesses

Those who are bringing big bucks to Google are agencies, marketers and businesses part of its Ad Network. They are driven by the fact that Google is an incredible source of targeted, and qualified traffic.

Publishers

AdSense Network Members allow Google to offer targeted ads on their web properties.

It is important that Google keeps offering those publishers enough incentives to keep monetizing their content via the AdSense platform.

I treat them here as “customers” because Google still needs to “convince” them to use the AdSense platform to monetize their content.

Google key resources

Even though Google is a digital business, that might make you think the company has no real assets. This is far from the truth.

As of 2017, Google had $7.2 billion of contractual obligations, primarily related to data center operations, digital media content licensing, and purchases of inventory.

This implies a few key resources:

The most basic thing any sites with a large number of traffic needs is a massive server infrastructure. Back in the late 1990s when Google was still in the very initial stage at Stanford, it brought down its internet connection several times, by causing several outages. That allowed its founders to understand they needed to build up a solid infrastructure on top of their search tool. Today Google has a massive IT infrastructure made of various data centers around the world.
Another element to allow Google to stay on top of his game is to keep innovating in the search industry. Maintaining, updating and innovating Google‘s algorithms isn’t inexpensive. Indeed, in 2017 Google spent over $16.6 billion in R&D, which represented 15% of its total revenues.

Google distribution channel

I believe that one of the vital ingredients to Google success was its distribution strategy, since its first few years of operations. That is also why Google relies on:

global sales team which uses business development to keep growing Google operations
Google deals and partnerships that bring it on billions of devices in the world

I’ve extensively covered Google distribution strategy below:

The Deal That Made Google The Tech Giant We Know Today
Why Google Success Was The Fruit Of Its Business Distribution Strategy

Google cost structure

With its over $110 billion in revenues in 2017, Google reported a $12.6 billion in net profits. This implies a few critical items in its income statements:

traffic acquisition costs is a crucial metric to assess Google ability to generate value over the years:

[image error]TAC stands for traffic acquisition cost, and that is the rate to which Google has to spend resources on the percentage of its revenues to acquire traffic. Indeed, the TAC Rate shows Google percentage of revenues spent toward acquiring traffic toward its pages, and it points out the traffic Google acquires from its network members. In 2017 Google recorded a TAC rate on Network Members of 71.9% while the Google Properties TAX Rate was 11.6%.

As we’ve seen R&D costs represented 15% of its total revenues, or $16.6 billion
Sales and marketing represented 11.6% of its revenues or almost $13 billion
Datacenters costs also represent another good chunk of Google cost of revenues

Google revenue streams

Google business model can be broken down into three main lines:

Google advertising network
Google other revenues (consisting of Apps, in-app purchases, and digital content in the Google Play store; Google Cloud offerings and Hardware)
Google other bets

Key takeaways

The business model canvas is a model that helps you have an overall strategic vision of your business. It is comprised of nine building blocks. Those building blocks are critical to assessing your long-term strategy.

This is one of the methods you can use. To sum up, the nine building blocks are:

Key partners
Key activities
Value proposition
Customer relationship
Customer segment
Distribution channel
Cost structure
Revenue stream

Each of those blocks is not independent of each other. In fact, in many cases, they are strictly tied to each other.

And from the interactions between them, you can build a sustainable business model able to unlock value for your organization and other players that are part of its growth.

Alternative ways to design, develop and understand a business model

The business model canvas is a good starting point to assess your business or a competitors’ business. It is also a simple tool to leverage on if you need to design a sustainable and financially viable business model.

However, that is not the only tool. Alternative tools for business model innovation and design comprise the lean startup canvas, the growth hacking canvas, Blitzscaling business model innovation canvas, and many others.

In other words, what’s is critical is to understand what you need a business model for. Indeed, if you need a business model because you need to test the assumptions underlying your business a lean startup model might work for you:

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The advantage of the lean startup canvas is the reduction in uncertainty and risk, as you start reiterating on a measuring whether the product or service delivered to your audience is a solution to their problems.

You can track that by looking at key metrics. This model is well suited for those that want to grow a lean organization by limiting the risk of running a business based on too many assumptions and with an approach that is driven by your customers’ needs.

Another tool that might work instead, if you want to accelerate the growth process, via a framework that is designed to test as many things, in the shortest timeframe to enhance growth is the growth hacking canvas:

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The growth hacking canvas also built on top of the business model canvas and similar to the lean startup canvas, it has an additional layer in comparison to the latter as it allows to identify a set of actions to undertake to measure, assess and speed up growth.

Growth marketing is a key ingredient for the success of any business in the current landscape. It is also the first move toward a 10X growth thinking for your business.

A third tool, you can use for your business is called Blitzscaling business innovation canvas. I put together this framework after reading the book Blitzscaling.

The Blitzscaling canvas aims to design an innovative business model to generate massive growth. More precisely Blitzscaling prioritizes on speed over efficiency and makes of massive growth its primary objective.

Thus, in a climate of uncertainty where competition or the market might threaten your business, any delay might mean the death of your business. Then the Blitzscaling framework might be the best suited to face that scenario:

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Blitzscaling tells you that if you want to create a thriving business, you’ll need to leverage three key elements, the first being an innovative business model.

This business model will need to be built around four growth factors (market size, distribution, high gross margins, network effects) and to avoid the to primary growth limiters (lack of product/market fit and operational scalability).

Blitzcaling is well suited if you’re trying to scale a business and bring it to a billion-dollar business as quickly as possible!

In short, what tool to use to design your business model will depend on what is that you’re after. In this guide, you have enough material to get going with your business!

Handpicked business models:

Business Strategy: Definition, Examples and Case Studies
What Is a Business Model? 30 Successful Types of Business Models You Need to Know
How Does PayPal Make Money? The PayPal Mafia Business Model Explained
How Does WhatsApp Make Money? WhatsApp Business Model Explained
How Does Google Make Money? It’s Not Just Advertising! 
How Does Facebook Make Money? Facebook Hidden Revenue Business Model Explained
Marketing vs. Sales: How to Use Sales Processes to Grow Your Business
The Google of China: Baidu Business Model In A Nutshell
Accenture Business Model In A Nutshell 
Salesforce: The Multi-Billion Dollar Subscription-Based CRM
How Does Twitter Make Money? Twitter Business Model In A Nutshell
How Does DuckDuckGo Make Money? DuckDuckGo Business Model Explained
How Amazon Makes Money: Amazon Business Model in a Nutshell
How Does Netflix Make Money? Netflix Business Model Explained

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