By Josh MacDonald
Think about the biggest names in tech right now.
Do any of these companies come to mind?
- Google, Yelp
- Uber / Lyft
- Facebook, Instagram, any other social network
- Amazon, eBay
- Airbnb, Foodler
Take a minute and think: What do these companies sell?
The answer is they don’t really sell anything besides a connection between people and/or businesses.
In the last few years, we’ve experienced an interesting shift in how online companies get big.
Instead of selling their own stuff, they simply connect goods and services together and take a cut on everything that happens.
Companies Using the Model of Connecting Rather than Selling
- Uber. If you don’t have a taxi medallion, you can’t drive people for money. Right? Uber broke that rule and quickly became the world’s largest “taxi company” despite the fact the company owns no taxis. Much of their disruptive success stems from the fact that Uber is really convenient and preferred by almost everyone over taxis.
- Facebook. By revolutionizing how content was shared, Facebook didn’t have to create any content of its own. And yet, they are now the most popular media owner, and yes, they have license to use your content for their own purposes. Though for most people, that’s okay. There isn’t another place where everyone is connected with the chance to share what they’ve been up to.
- Alibaba. Alibaba is the largest online marketplace in the world, but they do not put out a single product of their own. Even Amazon has its own product lines called “Amazon Basics,” but Alibaba sticks to the connection model through and through. Alibaba is pretty much the only trusted international wholesale marketplace. They’re invaluable to millions of individuals and companies doing overseas trade.
- Yelp. This is just a glorified search engine that has a hold on almost every modern business. They’ve come under fire for modifying and/or adding/removing reviews, but one thing is for sure: They didn’t write any of the reviews themselves. Despite all of the controversy, they’re seen as absolutely essential to anyone who uses Yelp. The thought of going somewhere without checking its Yelp rating beforehand can be abhorrent.
What the Connection Model Means for the Future of Online Entrepreneurship
Connection-based startups such as the businesses above are always in the public eye, and to the young, aspiring entrepreneur, building a startup is very enticing.
There’s potential for recognition and riches, all without the need to have a massive starting capital to purchase inventory or hire staff.
As the more “regular” businesses revolving around owning actual products and services are talked about less and less, there will be less competition for the emerging entrepreneur crowd, but all of the demand will still be there.
Even with the emergence of the connection model, they still rely entirely on people who provide products and services.
So if you don’t see yourself becoming the next Zuckerberg, don’t sweat it. You can still have it all.
How to Start Your Own Business On the “Connection Model”
The definition of a startup is a business that’s rapidly scalable. All of the above businesses were considered startups at one point, but they all had one key thing in common: Once a user tried the connection model, he or she would never go back to life without it.
- Uber saves consumers from taxis: Ridiculous fees, poor hygiene, and rude, gruff operators (most of the time).
- Alibaba saves businesses from international risk: These days, Alibaba is always the first place you go to find a wholesale supplier because of the reliable suppliers, the strict adherence to quality, and the money-back guarantee Alibaba offers.
- Yelp saves consumers from wasting money: Everyone has spent money at a local establishment (maybe a restaurant or mechanic) and regretted it later. If you check Yelp, that problem is almost completely gone.
To make it with a connection model, you can’t just connect people to one another…you have to create something people can’t live without.
That’s an important distinction to make.
As online commerce continues to evolve, create a connection model and become Henry Ford—make the car when everyone is used to the horse.
image credit: Pixabay