Monday, 30 July 2007

Business plan obfuscation: Twitter style

Scoble points out that there's a difference between "not having a business plan" and not telling the world what your business plan will emerge to be. I like the term "Business plan obfuscation" too- that's a handy label! However I'd suggest that there's a halfway house between investors backing the eventual business model, and investors backing the public business model: it's not that uncommon for a company to have several business models available to pursue, some more ambitious and flaky, others more concrete and modest.
I've seen investors back the same company, but on different expectations of which business model will pan out- that can be OK if there's enough cash to properly reach a decision, but generally it's better if everyone has the same goal.
Sometimes the plan VC's actually bought into at the start is the same as the plan the company wants to tell the world about at that time, and the same as the plan that produces first revenue and also the plan that results in the big exit. However, often it doesn't quite work out that way! I think most VC's get this; I'm sure that when Fred Wilson quotes what he said about being the same for Twitter: "The question everyone asks is "What is the business model?" To be completely and totally honest, we don't yet know.", then the key here is the "the",Twitter may today show the world only a "geek-trendy" product, but I'd suggest that they may be several business models in the works, with different revenue streams, different risk profiles and different work profiles.
However, it's interesting to note that when Yuuguu launched its truly free screensharing service there was suspicion from some potential users about the company's business model. If you're "free" it can be important that people understand if there's some "hook" that will kick in if they start using the service. Now that Yuuguu has launched it's low-cost international conference call service everyone can see their long-term business model, or maybe they are just seeing the first revenue model...