The Customer-Funded Business by John Mullins
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In his latest book, John Mullins, Associate Professor of Management Practice in Marketing and Entrepreneurship, uncovers five novel approaches to raise start-up capital and presents case studies of large (or small companies) that have successfully used them in the past. Learn more about The Customer-Funded Business: http://bit.ly/customer-funded-business Learn more about John Mullins: http://bit.ly/john-mullins
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The Customer-Funded Business by John Mullins
- 1. © John Mullins 2014 The Customer-Funded Business: Start, Finance, or Grow Your Business with Your Customers’ Cash • John Mullins • London Business School
- 2. © John Mullins 2014 Let’s Face an Uncomfortable Fact: Most VC-Backed Ventures Fail • Why? – Incredibly risky: building and scaling new ventures is hard! – Many VCs – and some angels, too – have never built a start-up themselves and taken it to scale – VCs’ ‘shoot for the moon’ mentality: an all- or-nothing strategy. Risky for you!
- 3. © John Mullins 2014 Is There a Better Way? The Customer-Funded Business! • Five models to make your customer your VC, at least at the outset – Pay-in-advance models – Matchmaker models – Subscription models – Service-to-product models – Scarcity models
- 4. Pay-in-Advance Models Pay-in-advance models Pay-in-advance models are those in which the business asks (and convinces!) the customer to pay something up front—perhaps a deposit, perhaps something structured in another way, perhaps the full price—as a requirement to get started on building or procuring whatever it is that the customer has agreed to buy. © John Mullins 2014
- 5. Matchmaker Models Matchmaker models Matchmaker models are those in which the business, with no or limited investment up front, brings together buyers and sellers—without actually owning what is bought and sold—and completes the transaction, earning fees or commissions for doing so. © John Mullins 2014
- 6. Subscription Models Subscription models Subscription models are those in which the customer agrees to buy something that is delivered repeatedly over an extended period of time—perhaps a product, like newspapers or a box of organic veggies delivered weekly straight to your door—or a service like a cable TV subscription or your monthly Netflix fix. © John Mullins 2014
- 7. Service-to-Product Models Scarcity models Scarcity models are those in which what’s for sale is severely restricted by the seller to a limited quantity for a limited time period, with the seller’s supplier being paid after the sale is made. © John Mullins 2014
- 8. Matchmaker Models Service-to-product models Service-to-product models are those in which businesses begin their lives by providing customized services, and eventually draw on their accumulated expertise to deliver packaged solutions that stand on their own. © John Mullins 2014
- 9. © John Mullins 2014 What do Michael Dell, Bill Gates, and Mel and Patricia Ziegler have in common?
- 10. © John Mullins 2014 Their Secret? Each of them started and grew their companies largely with their customers’ funds.
- 11. For Entrepreneurs and Angels who Wish to Make Money… © John Mullins 2014