Spark – Tony Seba “Business Models for the 21st Century”

Earlier on in the year Spark hosted a presentation by Tony Seba, a lecturer in high tech strategy and entrepreneurship at Stanford University. Tony is also a author, speaker, entrepreneur, mentor capitalist, consultant and founder of PrintNation

Last year Spark also hosted a talk by Tony about “Building a Winning Company”, much of which reflected the contents of his book .i.e. the 9 rules behind one of these winning businesses – my favourite being “Change or Die”

I also previously met Tony over a dinner hosted by Spark and Chiasma’s godfather Geoff Whitcher, along with several of my other UoA entrepreneurial colleagues

This time, in the new Owen Glenn Building, Tony discussed “Business models for the 21st century”

Firstly he threw the concept of a business model back at us to see how we define a business model of which the audience replied with what seemed like pretty fair definitions such as: a way to derive revenue/ profit, way to reach your customers, way to creat economic value – the end result being there are many definitions

Tony suggested his definition “The core logic and strategic choices for creating and capturing value within a value chain”

Notes from the talk:

  • you have only created value when the customer says you have
  • you want to capture this value in order to make money
  • a business model is not a strategy or financial or marketing plan – it is a combination of all these elements
  • it is not about creating new ventures, simply implementing new models to create new revenue streams
  • business model innovation is as if not more imporatnt as technology innovation for a product e.g. google adwords

Tony also highlight some new trends in business models

  • role reversal – consumers are now the producers of value not the product – facebook youtube
  • opensource
  • plug and play technology
  • speed – quicker tech adoption
  • same product – new business model to capture hidden value, look to deliver old products in a new way
  • consumers wanting things on demand
  • sharing

Couple of examples of modern day business models that exemplify some of these trends

  1. Zipcar – car rental vs car sharing – Sign up, Different payment options either Pay a monthly registration fee or an hourly/daily rate with an annual fee as well. Pick a car which is located in a permanent car park closest to you. Use a card to open the car. Drive it. Return it to the same spot and thats it. All insurance and gas costs are included.
  2. BagBorrow or Steal – owning vs sharing – – Hire expensive branded bags (Gucci, Prada, LV, Chanel) or jewelery for how ever long you want whether it be for a special occasion or day to day requirement.
  3. Music – Radiohead released there ‘In Rainbows’ album on the internet for FREE. It allowed individuals to purchase the album for as little or much as they wanted. The result was that an average price of $2.62US was paid for the album.  Artists normally receive $1US per album sold the through the traditional channel. The overwhelmingly majority of the profits go straight to retailer. Artists get most of their profits from concerts. Check out this ARTICLE which breaks down the cost of producing an album and where the profits go  i.e.

All of these new models allow for disimmediation – getting rid of middle man so that the inventor receives a greater profit. The internet has played a majour role in providing a channel to connect the inventor with the end users/ consumers to allow these new business models to florish.

More examples

  2. lulu
  3. Software as a service – Xero

2 responses to “Spark – Tony Seba “Business Models for the 21st Century”

  1. I love Etsy!

  2. Pingback: Free Music ? Again? «

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