LearnLearning about new business models

writes on December 17, 2006

We’re launching two new events, in addition to The Future of Web Apps:

  1. Future of Web Design (FOWD)
  2. Future of … (can’t tell you yet!)

The Future of Web Design is in London and our other event is going to be in New York City. Gill and I are in NYC right now, pounding the pavement and viewing venues. What’s been most fascinating to me is learning about the business models of venues and hotels.

I love figuring out how other companies make their profits, cut costs and make business decisions. I think there’s always opportunity to gain from other’s wisdom and experience.

Here are a couple interesting things about the hotel/venue industry:

  • They’re absurdly profitable on their guest rooms but make almost no money on their venue space. Therefore, they basically give away their venue space, as long as you fill lots of guest rooms.
  • Hotels will use their venue space as a powerful way of selling guest rooms
  • Venues that don’t have guest rooms look to make all their profit on the food and beverage
  • They’ll try to sway you by throwing in larger rooms for you and your staff, if they haven’t sold those rooms already. They’re not losing any money, as the larger rooms would’ve gone unsold anyway, and they’re gaining your good will.

So the most valuable lesson I’ve learned? If you have something (product, service, etc) that’s going unused, find a way to use it to encourage potential clients to do business with you. Make that resource work for you, instead of wasting it.

After viewing the Waldorf=Astoria, their Head of Sales kindly treated us to Champagne Afternoon Tea. It was amazing! I know it was a tactic to help win our business, but it was still wonderful (and ironically, will probably make it more likely that we’ll go with them).

If you ever get the chance to talk shop with people from a business that’s totally different than yours, I’d highly recommend it. It’s a great chance to pick up tips for improving your own business.

0 Responses to “Learning about new business models”

  1. I just found this for my blog and remembered this post.

    Maybe the Articles plugin (http://alexking.org/projects/wordpress middle of page) would satisfy the people that just want articles. I know you have older articles from other sources on your about page but I figure this might be good to combine with a page for articles on this site.

    Also, the older articles are really useful and they are under the about section. Maybe create a new page called Articles for this?

  2. Ryan Carson on December 27, 2006 at 10:42 pm said:

    He can and should write about anything and everything. Not everything has to be an “article”. Sort through the stuff that you find useful and please kindly shut up.

    Thanks Ken 😉

  3. To the people that say this isn’t on topic or that there isn’t much useful.

    This is his personal blog/business blog. He never said that this is where the new barenakedapp would be. He just said that he would continue talking about it here.

    He can and should write about anything and everything. Not everything has to be an “article”. Sort through the stuff that you find useful and please kindly shut up.

  4. In order to help supplement costs, do you think an ad supported version of the free accounts would be a good/bad idea?

    Yes, we tried this initially by using Google AdSense and it just didn’t work. We could go the route of selling the ad space but that would require brining on an ad sales person, which is just extra stuff to worry about.

  5. For what it is worth, I think this is on topic – it’s about business and resource allocation and influencing buying decisions – great post.

    One point you could tie into this from a web perspective is what Jeff Bezos talked about at the Web 2.0 Summit. He basically said, “We have unmet capacity – so we built s3, etc and are practically giving away that capacity…or at least, finding a way to monetize it to some degree”. Brutal paraphrasing, but great play by Amazon.

    Under-employed resources are a killer…online and off.

  6. Luca Mearelli on December 18, 2006 at 5:44 pm said:

    “This makes me think of Design Patterns for other industries.”

    Oh so true. That exists anywhere (the term originated in architecture). Even for managing enterprises you have models of how it should be done that are actually embedded in software and systems (look at MRPII)…

  7. Ryan,

    This is kind of off topic and on. Its about an idea for a business model. It one of your earlier posts, you mentioned that the free and small charge accounts in Drop Send were a lot of effort for little money (for a free account, well that is a lot of work for no money persae). In order to help supplement costs, do you think an ad supported version of the free accounts would be a good/bad idea? So, if someone is using the free accounts of a service, there would be minimal, non-obtrusive ads and as soon as they upgrade to ANY paying service, these disappear. As a consumer, I wouldn’t really care. I know some people do. Actually, I was amazed at the guy who kept getting up at the FOWA San Fran complaining about blog owners utilizing ads and ‘taking away from his space’. That guy really was annoying- to me.

    The pluses, it seems, is supplementing the time to support these free accounts with some income to help pay for the support. The downside, would it alienate too many users? I’d be very curious to hear your answers.

    Also, one last question. On Drop Send, you have ‘Sent by DropSend’ or whatever tagline you have. Do you think this would work in other situations? If a customer is paying for a service and something is sent to their customer, do they mind having a advert at the bottom like this?

    I apologize if this was too off topic 😉

  8. “I think thereâ€s always opportunity to gain from otherâ€s wisdom and experience.”

    This makes me think of Design Patterns for other industries.

  9. Coolbeans on December 17, 2006 at 5:13 pm said:

    Not much useful in this article. I suspect you used it to justify writing off a really cool trip.

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