Our 4-Hour Workweek Business Model
For several years, Gillian and I have been members of an angel investment group - the Sacramento Angels. As members, we met several hundred start-up companies. Our experience with the group taught us a key tenet - successful companies need to clearly articulate their business model, that is, state how they will make money.
Our 4-Hour Workweek is no different. We are in business to make money. But how? Our business model is to set up a series of on-line publishing websites and generate four sources of revenue: advertising, reseller of products through affiliate programs, direct product sales, and networking events.
We need to be flexible about our business model. If something does not work well, we must to be prepared to change and improve the model.
Today, l would like to focus on our advertising model.
One of our first activities is to develop the plan for our advertising revenue model. Most start-up companies need to conserve cash. We are no different. Therefore, we have decided not to hire a professional and experienced person to develop our advertising revenue model. Of course we could consider bringing on board an equity partner to fill this role. Perhaps we could find someone willing to work for a piece of the business in lieu of cash?
We do not plan to bring on a partner at this time. We believe we can develop a reasonable advertising revenue model on our own. How? By studying and replicating successful websites such as Techcrunch.com, Dooce.com, and The Huffington Post. Why create something new if you don't have to?
Techcrunch, with over 1.5 million monthly readers, uses a company called Ads-click.com to deliver and display ads. According to a recent Business 2.0 article, advertisers pay $10,000 a month (with a minimum two-month pre-paid order) for a single ad (about 120 pixels by 120 pixels). At last count Michael Arrington's website generates over $100,000 a month in advertising revenue. Not too shabby! I think I would be pretty darn happy with these kinds of numbers.
Now how to get a readership of 1.5 million per month. This will be a topic for another day.
Heather Armstrong, creater of Dooce.com has established a large readership through her creative writing style. Six years ago, Heather quit her daytime corporate job (she was fired for writing too much about her job - boy did that web development firm give Heather the break she needed!). She does so well with her website, that in 2005, her husband Jon quit his job, and together they make their living from Dooce.com by partnering with Federated Media.
And then there's the mega-darling Arianna Huffington. Arianna's website, The Huffington Post, became an overnight success and is now one of the most read blogs in the world. The Huffington Post serves dynamic ads via Advertising.com
This brings us to the master guru Darren Rowse of Problogger.net. Darren, the minister from Down-Under, discovered blogging in 2002. Darren's website, with 30,767 faithful readers (based on Feedburner statistics), is a great resource for tips on generating revenue through advertising.
So, which advertising solution do we chose? Give us the week to research. We'll get back to you next week on our decision. And if you can help, please comment on your successes or failures in this area. We solicit your opinion.
Pierre Cutler
Our 4-Hour Workweek
