Business Model Buyers

Some people want to buy not just your product but your business model behind it.

business model buyers

On the one hand, you have the mythical black box. It accepts inputs and magically transforms them, behind opaque walls, into something valuable.

This is the diagnosing physician, cybersecurity software, an iPhone, or a food delivery service like Uber Eats. Render inputs and a solution to your problem shows up on your door, neatly packaged in a sheet, a report, a box.

Some people love finished products like these and most people prefer them.

On the other hand, you have a form of decommoditization that involves pulling the curtain aside or letting you look under the hood.

  • The pre-1980s consumer vehicles you could repair at home.
  • Open source software that is infinitely modifiable
  • Constructivist architecture that reveals the essential engineering keeping the building standing
  • The Teppanyaki grill in a Japanese restaurant, which reveals the chef’s magic in front of you.

You know what early adopters like? Witnessing the expert transform strips of Kobe beef and green onion transformed into something delicious. And at least voicing their opinion, if not actually altering the outcome.

They want to see, react to, and know about, the grill, the intensity of the flames, the sauces, the process, the people, the tools, the expertise, the customs, the ingredient costs, the personnel costs, the revenue, the profit, the branding strategy. All of it. That’s what they are paying for.

Early adopters buy the solution and the business model behind it.

But not just early adopters.

Way back during the Reagan administration, NBA fans were content with the spectacle of great competition among great players. Then they started to learn player backstories. Movies like Hoop Dreams came out – a decade after NBA halftime shows had gotten fans used to behind-the-scenes player biopics.

Fans studied the entire arc of player careers, from high school draft, to college draft, to game rotation politics among NBA rookies, to peak performance in late-20s, to typical retirement, to post NBA career paths. What’s he doing now?

Most fans learned more about the money side of basketball than the game itself.  What were player salaries and bonuses? How did they feel about their salaries? What about entire team finances?

Fans wanted to learn about corporate governance – why are players traded, what is a “salary cap”, what are the revenue streams? How are TV contracts negotiated and what’s the impact of illegal streaming? What are the relationships like between the NBA itself, as an organization, and the billionaire franchise owners who essentially created it? Fantasy leagues aren’t about identifying with players, they’re about identifying with executives who manage NBA teams as businesses. 

In short: the modern NBA fan buys the entire business model, not just the product.

Business model buyers want to know about boring things like customer segments – who buys the product, what type of people are they, how do you describe them demo- and psychographically?

Talk about meta. They want to know about product positioning – how does the company’s messaging set it apart from alternatives? Are they doing a good job communicating a unique value proposition

And so on. The entire black box is fair game: core business processes, core assets, strategic partnerships, strategic employees and contracts, cost structure, marketing channels and platforms, and present and future revenue streams.  

The people who buy Tesla, Kiva, Heifer International, or Cryptopunks? A lot of them want to know how it all works. At least, the ones who buy it first.

Here’s the thing, if you’re new, or if your product is, you might have to figure out how to sell the business model, too.

A good place to start is figuring out what it is.