As I sat drinking espresso chatting to my experienced entrepreneur friend who prefers to remain anonymous, we decided there are three classes of businesses:
Mime businesses perform a service similar to a mime in a Parisian public square. The mime can try and charge the audience, but it doesn’t always work and it’s tough. Smart mime’s know that the audience is the product and the mime’s customers are those that pay him for access to that product. The amount of money a mime can make is directly proportional to the amount of product he has to sell. Mime’s need a lot of product to be successful. The audience doesn’t get any direct value from the mime’s performance so they don’t need the mime. If he goes away the audience will be just fine.
Examples of mime businesses: Huffington Post, TMZ.com, Facebook, Twitter.
Bakers sell a product that has clear tangible value. You know this because if you wanted to you could resell the product to someone else for a price not too distant from the one you paid. The amount you pay for a baker’s product is worth less to you than the value of the product itself. What the baker charges is whatever it cost him plus whatever the market will bear. If all bakers disappear there won’t be any bread and panic may ensue.
Examples of bakers: Walmart, Barnes and Noble, Costco, Linode, Apple, Microsoft, Dell.
These might be bakers or mime’s. You decide: FT.com, NYTimes.com.
Bankers (investment bankers in this metaphor) sell a product that can help you make more money. A banker’s product can improve your circumstances. In rare cases it can make you wealthy. Bankers are selling a product that has real value, bundled with hope which means they can charge more.
Examples of bankers: Ebay, Amazon’s seller program, Paypal, SEOMoz, Authorize.net, Google AdWords, Google AdSense, iTunes and Android market for developers.