My Story

Why Business Models …

I got into business models in 2010 because I had a good idea in the tech space, but was told I didn’t have a business model … while in business school.

My target market loved it, the B*school profs didn’t, so I turfed it (let’s call the idea crowdfunding).

Having already ran a successful business with several roommates in University – Tomorrow’s Tuition, a local painting company – I decided to become an ‘expert’ in business models (whatever that means).

After all, that seemed to be the holy grail of knowledge that I was missing, right?

Now, I can see clearly that business school teaches everything wrong and gets the majority thinking about business in the wrong order.

That’s probably why, anecdotally, so many of the best businesses are started by “dropouts” or people with no b* school background.

Back in 2010 Lumos was a ‘we,’ and so we invested in a website and I started writing.

I started blogging in 2010 about business models. V1 of the site was super popular and highly ranked, but collapsed because of developer problems. V2 of the site (pictured below) went on a similar trajectory, and ultimately collapsed due to a different developer problem. This site is V3.

lumosbusiness.com V2 (15-20K monthly pageviews)

I have learned, over the years, that a lot of the moonshot, B2C ideas that get everyone excited are backed by $10s of Millions of VC dollars that very few non-technical founders ever have a chance to raise.

Even coders and engineers have a low probability of ever raising that money outside of a few geographies.

The boring and unsexy ideas, most of which are B2B, are where most entrepreneurs make their money; history bears this out through multiple cycles.

Tools like the business model canvas, customer development framework, value proposition canvas, and others, are very useful at any stage of a business, but particularly early stage.

Nobody needs a business plan, but a business model helps to set expectations and identify the key areas around an opportunity through a certain lens.

Nowadays, with the hype cycle around blockchain, AI, etc. many are jumping in without a business model of any kind.

While it’s true that experimentation and ‘gaining experience’ are the essence of mastering entrepreneurship, chasing the wrong ‘idea’ can lead to bankruptcy, burnout, or more commonly these days, fraudulent #s.

You would be better off starting a painting company, dog-walking service, or social media agency than chasing ideas that require outside capital to succeed in most cases.

You will see many ‘new money gurus’ pitching eCommerce, Dropshipping, SaaS, and other ‘internet’ models, but beware … a lot of the easy money has been made in those markets and most will fail because they don’t hit high enough volume relative to the margins (even if you work 24/7).

By definition, the best place to start is not on the ‘end model’ but to understand the problem in an underserved niche and develop the model from there.

Anything ‘unsexy’ where you can talk to customers, gain validated insights, and get inside the sales channel is better than big dreams and a pitch deck when starting out.

This is coming from someone who loves innovation, big ideas, and ‘the chase’ of raising money from investors. The nuance to the above is having access to the right amount of capital, on the right terms, at the right time.

If you can get capital from good investors, take it. There is no one-size-fits-all model or piece of advice.

That’s why Business Model Innovation isn’t ‘management consulting,’ it’s a structured process to measure progress and set expectations.

You can use any number of tools from the Business Model Toolkit for free and learn from a number of other good business model blogs.

But if you haven’t seen multiple models through multiple cycles on both the B2C and B2B side, it can be hard to assess the probability of success of one model vs. another.

And most importantly, why or why not one model may fail.

An example of this is the DTC (Direct-to-Consumer) boom into 2021, that ultimately started to unwind and blowup into 2022 because of rapidly rising CAC costs.

Was this predictable?

(shrug emoji)

You can go through each and every type of business model and see repeating patterns that offers clues, signals, signs, etc.

It requires in-depth research, the majority of which is published on this blog.

In any respect, I love the ‘game’ of business and am a believer in the adage ‘those who can, do – those who can’t, teach.’

I have been a part of many companies, raised capital, traveled and lived in Europe/LatAm (some pics below).

The most successful company I have ever been a part of, ironically, was Tomorrow’s Tuition. A simple business model in an über-competitive market.

That was 2006 while I was studying Biochemistry. Then I went into business school and learned about ‘blue oceans,’ ‘disruption’ and every other type of homerun business model that requires massive capital and a series of tradeoffs that you won’t understand until you get in the frey.

Competition is not always bad and there is usually significant latitude to capitalize in highly-competitive markets if you can understand what the customer segment(s) truly want.

That’s why I believe more than anything else, business school needs to be completely remixed. If I had read my own words 15 years ago, things would be a lot different today.