From now on, we'll dive into real-world examples
Let's look at practical business model examples
In the previous session we learned about
the business model of the video rental market
This is a kind of the leasing and the rental business model
As you can see, this machine is Xerox printer
It performed very well compared to its competitor
For example
It prints three papers in a minute
Three papers
And the competitors?
Competitors only print out
just one paper in three minutes
So functionally, this printer is superior
Only problem was
It is very expensive in prices
So, the Xerox warehouse was full of
new machines that could not be sold
Even though Xerox made a good product
they were almost failed
Then they changed the business model
from just selling product to the rental businesses
Instead of selling machines
They started renting printing machines out
and they get $25 a month
Since then, what happened?
Business has flourished
Every floor of the building in New York City
had Xerox machines
The rental businesses are very popular these days
And you can see them in many places
For example
Heavy equipment and hospital machines
and so on
They use rental or leasing business models
What about the bike shop, clothes rental,
and the video rental as I already mentioned
And the rent cars
These are all rental business models
Remember rental business model
Next
This is a Bait & Hook business model
It is using bait to fish,
where fish means
consumers or real profit making
When Gillette safety razors patent expired
employees of King Gillette were very worried about it
Then King Gillette said that
Don't worry
Give them the razor and sell them the blade
If the consumers has Gillette razors,
they need a specialized blade attached to the Gillette razor
Gillette means
He's going to make money
through the blade, not razors
If you try to purchase the razor,
you will see the price differences right away
Razors are relatively cheap
But blades are very expensive
In this case
razor is a bait and blade is a hook
This guy is John D. Rockefeller
He's known as the richest man in human history
His business is refining oil
Then he dominates the oil market in America
almost 90%
Think about it
After then, what happened?
The market itself matured already
So he wanted to go another market
Which one is additional big market?
Yes, China it is
So he went to China
If I were him
I would advertise my oil
and sign the contract with the vendors in China
But his approach was completely different
Which is why I cannot be Rockefeller
Rockefeller took a lot of oil lamp
and gave them away almost for free
to the Chinese people for the first time
What did the Chinese people need after that?
Yes, of course
Oil
So Rockefeller said that
That is a coincidence
I happen to run oil businesses
and you can purchase the oil right away
This is a kind of Bait & Hook business model
This is so clever, isn't it?
Again, this is Bait & hook business model
Similarly, Bait & Hook business model
are often found in everyday life
Let's look at the coffee machine
Coffee machine with complicated technology in it
are actually relatively cheap
But if you purchase a specific coffee machine
then you must purchase a specialized coffee pot
attached with this certain type of coffee machine
Coffee machine is cheap
but coffee pot is expensive, unfortunately
So the coffee machine is bait
and coffee pot is kind of a hook
So, now you understand that
When you purchase the inkjet printer
then what happens?
You have to keep buying certain specific ink
attached to the inkjet printer
Ink itself is very expensive
The same goes for the digital camera
When you purchase certain types of digital camera
then you have to purchase a specialized lens attached to
the certain kind of digital camera
The same goes for wet mop
that cleans the floor
You need to keep buying cleaning clothes in boxes
They are disposable and expensive
What about the mobile game?
You can play the mobile game for almost free
but you need to purchase items
to update or reduce the loading time
This item looks like a hook
and the mobile game itself is a bait
Remember
The Bait & Hook business model is very useful
Next
Let's move on to the Subscription business model
Subscription
Subscription is literally
you pay a certain amount of the money
for a certain amount of the period
and you get a service
This picture is Dollar Shave Club
When you subscribe this company
This company sends you
a simple shaving tool regularly
It is a very simple model
The founder of Dollar Shave Club
spent $5,000 to promote this company
and filmed a short commercial video
Let's take a look at it together
How about the video?
It looks very humble, isn't it?
But this video became a big hit
and it was a very successful
Thanks to the success of the video
the company could attract tons of subscribers
Then later, what happened?
Dollar Shave Club was successfully sold to
the Union Lever
The Union Lever
Global company Union Lever for $1 billion
So, do not underestimate the importance of viral video
Spotify
Spotify is one of the famous companies
that use the subscription business model
The total consumers are about 675 million
of which 263 million is paid subscribers
So that's why Spotify makes tons of money
What about Costco?
Costco, as you already know,
get an annual subscription
You have to pay membership
so you can go into this store
Costco's membership fee
is very important for Costco
Do you know how much membership fee account for
in total profit for Costco?
Guess how much it is
10% of them?
30% of them?
Good guess
But the right answer is 120%
120%
In other words
Selling things at Costco
is kind of a loss
and membership fee recovers the loss
Isn't it amazing?
This is the power of subscription
There are a lot of companies
that have applied the subscription model in their field
For example
This company sends cosmetic products regularly
if you subscribe to their service
And the pet companies are also applying
the subscription business model
There are plans for
one month, six months, and 12 months plans
If you subscribe to this program
it seems like they send you
a pet-related product on a regular basis
Next
Next is a business model
called Home Try-On
It is a business model that was
initiated by eyeglasses company
called Warby Parker in New York City
Think about it
You have to go to the store to purchase eyeglasses
Because you have to try them on
to see if they look good or not
However
If you do the eyeglasses business online
then there's a problem
that consumers cannot try on
Warby Parker solved these problems like this
How?
First, they put five eyeglasses in one box
And then they send them
to the consumers directly
And at home,
the consumers try on all the five glasses
If the consumer likes one of them,
then they just keep one
and put the rest of them back in the box
and then just send it back to the company
Then what happens?
The company gets it back
and pays with the consumer's credit card
because you kept just one eyeglasses
What do you think?
Isn't it cool?
The fashion company copied exactly the same
this home-try-on business model
This company asked consumers
to write about their body size
and put the body size into the website
And asked them to choose their style they want
Then, the hired professional stylist
select a few items
a few fashion items for the consumers
and sent them to the consumers in the box
This box is kind of a trunk box
The consumers open the box at home
and try on the fashion items at home
and make the decision
Exactly the same as Warby Parker
The decision process
If the consumer likes some of them
they keep some of them
and send the rest of them back to the company
Then the company takes care of everything later on
This is a Home Try-On business model
for the fashion company
Surprisingly
One of the big department stores in America,
Nordstrom acquired this fashion startup
For how much?
$350 million
Not because of the fashion itself
but because of their subscribers
Next up is Freemium business model
We say it is a freemium
As you can see
Freemium business model is
a combination of free service
and premium service at the same time
When I was in America
I also used Skype premium service
I remember that I paid about
$15 a month on average
Because I was on the computer
and my mom, who answered my phone call
didn't know how to use a computer
So, I had to call my mom's cell phone
from my computer
This is a premium service that Skype provide us
This premium service was to
call from computer to the cell phone
Skype charged me about $15 a month
Another example would be the SurveyMonkey
Have you heard about the name of the SurveyMonkey?
SurveyMonkey used
the freemium business model
You can use this service for free
if you want to make a survey questions
But if you want to use the advanced service
like analysis of statistics
You have to pay
Because this is kind of a premium service
So, again
Almost everything is free of charge
But some functions are premium
Let's move on to the Advertising business model
Look at this newspaper
In case of the newspaper
we use advertising business model
You can see there are many blank spots in a page
and this is a place to advertise
That's why we can read the newspaper relatively cheap
The main revenue source from the newspaper
is not consumer usage
But from advertisement from the advertisers
Let's look at Google
We always use Google
But we never paid for it
This is because Google doesn't get paid directly from us
But from advertisers
who knew that we use Google a lot
and want to advertise their products and services
So, the Google's success
lies in its advertising business model
What about Facebook?
Facebook is using an advertising business model
Recently, our university
advertised on Facebook
to promote our graduate school
There is a fixed unit price for the advertising
But it is quite expensive
It could be very expensive
How many companies and organizations
advertise on Facebook all over the world?
So, it is no coincidence that
Mark Zuckerberg could have become
one of the richest guys in the world
in a short period of time
This is the power of the advertising business model
Pokemon Go games are also
an advertising business model
The game itself is used for free
But the company makes the money through the advertisers
For example
You see the Target market, right?
Pokemon Go signed a contract
with a place like American retailers, Target
And Target pays Pokemon Go
Then, a very interesting and strange monsters
appears in front of the Target store exclusively
So, the consumer knows it
The consumers try to catch
this interesting monster
throughout the Pokemon Go game
That's why they go to the Target
This is the Advertising business model
between the Pokemon Go and the Target
I think you understood very well, right?
This is
Multi-Sided Platform business model
If the company connects two different sides
we say it is Multi-Sided Platform business
Originally, platform means train stations
It is kind of a space
that connects passengers and trains
It introduced that concept into the businesses
We have buyers and also we have sellers
We created some kind of marketplace
where they meet together
This marketplace is called as
Multi-Sided Platform
Here is a realtor, real estate agency,
and this person
connected the buyer for the house
and the sellers for the houses
And they help you with related contracts
And in return
she gets commission from both sides
Same thing happens to the car dealer shops
Do you know the credit list?
This is the credit list
This is a kind of an old website
But still a popular platform
You will find out when you go inside
It is organized by a region and cities
This is Chicago right now in America
But you probably have your cities too
I used it a lot when I was in America
to purchase used furnitures
and to get a room
This company is very profitable from commissions
from both sides
What about eBay?
The same goes for eBay
It connects the sellers to the buyers
and eBay on the commissions
When founder Pierre Omidyar started eBay
there was no online payment system in it
So, the users sent a check to his home directly
But think about it
There are tons of checks from out there
So, Pierre should get a part-time employee
But one part-timer
couldn't handle the many checks
So, Pierre quit his daily job
and he devoted himself to eBay
So, eBay later became a big company
No wonder people pay so much
eBay became profitable a year after it started
It never lost money
because of the commission
The same goes for Alibaba.com in China
With Jack Ma's internet businesses
the goal of Alibaba.com was
to allow a lot of small companies in China
to be exposed to global companies overseas
So, on the other hand
many companies out therex
can also find out the factories in China
That's why Alibaba is a platform
that was created for the B2B purpose
It is called Open Sesame
Do you know that?
Later, Alibaba will create Taobao,
a consumer-to-consumer website
You know the story, right?
Look at the Uber
Uber is a bit of a unique platform
Uber is a platform that
connects consumers who want a taxi service
with the people who can provide this service
But the important thing is
the service providers are not professional taxi drivers
In other words
The service providers are
general public like us
Anyone can become
a service provider in an Uber platform
and they can make additional money
It is actually true that
it is in a gray area of the law
Think about it
If Uber turns anybody
into a service provider like taxi drivers
then professionals,
for example, professional taxi drivers
who spent the money and time
trying to qualify themselves
will be very upset
But from a business point of view
Uber's business model has inspired many areas
Look at this Uber for doggy walker
Isn't it interesting?
This Uber for doggy walker
connects us to somebody
who can take care of your dog
Doggy walkers are just ordinary people like us
They don't have to be professional
But if they enrolled for the doggy walker in this website
then they can make additional incomes
What about Uber for laundry?
You know what the concept is, right?
It is a platform that connects the people
who need the laundry service
to the people who can provide the laundry service
But the service providers are not professional
They are just normal individuals like us
This is Uber for lawnmower
Isn't it interesting?
The local newspaper covered this story
about the Uber for lawnmower
Let's move on to the Airbnb Type platform
Airbnb is also one of the great platform
but a little bit difference is
connecting consumers and host
And there is a concept of the space rental
So, I took it out separately
as Airbnb types of platform
from general platform businesses
If you are a platform that connects
a specialized recording room
to the singers or someone who need it
It would be Airbnb for recording room
Airbnb for the recording room
This company is an online platform
that connects tourists or travelers with
someone who owns a private yacht
or private boat
We can see it is Airbnb for boat
Let me summarize
So far, we have discussed about
the Leasing and Rental business model
Do you remember the Xerox printer?
Second example would be Bait & Hook business model
Please remind John D. Rockefeller's oil business in China
And next, Subscription business model
Subscription business model is so popular
Think about Dollar Shave Club
or Spotify businesses
What about Home Try-On business model?
You can apply this Home Try-On business model
into your area
Then you can successfully run your businesses
What about Freemium business model?
You can provide your service
almost for free for almost all users
And then you prepare advanced service
for the Freemium users
Next one is Advertising business model
You can make a great service and product
then you can attract
so many consumers all over the world
Then you don't have to charge the money
to your consumers
Instead, you attract advertisers
and they are ready to pay your service
for their advertisement
Then you can make tons of money like Google and Facebook
Lastly, but not leastly
This is a Multi-Sided Platform businesses
There are tons of multi-sided platforms
If you are able to create a marketplace
that connect sellers and buyers
then you will successfully run your businesses
And there are very special types of
multi-sided platform businesses such as Uber
You can apply this
Uber types of business model for your business area
Uber for something
Uber for A, Uber for B
That could be a great business model
What about Airbnb types of business model?
Airbnb's specialty is a space rental
If you have any specialized space
such as a storage or a parking lot
then you can create a website
to connect the people
who need a parking lot or storage
and the people
who has a parking lot and storage unused
That could be great business model
which is Airbnb types of business model
You can make your business Airbnb for something
It could be great business model
I hope that this lecture was
very helpful for you to understand
the concept of a business model
and the example of the business model
Thank you for watching this session