Multiple Business Models

When I talk with early founders, I try to understand their business model from a high level. Some are operating marketplaces, while others are selling access to their software. Sometimes I encounter early founders who are trying to execute two business models under one roof.

To be sure, many companies have more than one business model and have enjoyed success. Usually, though, they focused on one core model in the early days. They solved the core problem well and scaled that solution with one business model. As they matured (and had more resources), they added another business model. Think Amazon selling goods to consumers via digital commerce and then, after more than a decade, expanding into selling cloud computing.

If you’re an early founder, avoid spreading yourself too thin. Consider mastering your core business model before expanding into a new one.