In my work as a Venture Capitalist, I come across a lot of startups, across a wide range of sectors. While the businesses I see are incredibly variable, the meetings I have with them are often almost exactly the same, opening with a bit of preamble, followed by much discussion about the company’s business model.
This is a pet peeve of mine. In all my years in the industry, I have never worked out why so much time is spent on models of businesses, instead of working on the actual thing. What are these models good for, and why do we keep creating them when there is a business to be run? In the very wise words of Derek Zoolander, why are we building tiny businesses for ants?
That is not to say that the business world is the first sphere of human endeavour to make this mistake. Just look at biology, where people have wasted years of research on evolution, despite the fact that it’s only a theory. I could sit here making up theories all day! Yet scientists continue to beaver away on the basis of some historical figure’s half-baked idea, proving that some habits are hard to break.
So how can you avoid this business model mistake? The only way is to go out and do it! Don’t tinker in the toy shop – build your business to scale, and do it straight away. If investors ask about your business model, point them to your business actual. They will have no choice but to be convinced.
Hardly Business Review 