I’ve been thinking more about business model fit to product and how to make a good big business. You may be asking what business model fit to product is. It is simply a very efficient and scalable way of making money that is highly symbiotic to your product and the intent of your users.
A few examples of great business model fit to product are advertisers purchasing search keywords on Google. People search more on Google than any other place. Advertisers wanted to be on those pages and were willing to pay to be there because they wanted to have their offers present at the exact moment someone was searching for their product, service or information they provide. Craigslist is another example. Jobs are a highly localized market. Tons of people organized by city use CL to find local items. For the most part, people post items they want to sell by category and people looking for those items browse the categories for things they want. CL tapped into the jobs market by charging businesses to post jobs. Finding talented people in local markets is very valuable to employers (We find our best talent on CL) and it costs much less than posting other places with better results. In short CL and Google return very positive results for their paying customers. At the same time, you won’t find paying advertisers on Google for non commercial search terms and CL only charges the businesses to post jobs. They don’t charge individuals for posting items for sale or post the paid job listings on the right side of the page with the free posts. The business model doesn’t fit for this portion of their site.
There are plenty of examples where there isn’t a business model to product fit yet. For example, take sponsored links on the side of Facebook. This model worked very well for Google, but it’s not working nearly as well for Facebook. The reason is the products are so different. With different products comes different user intent. The intent then drives the success of the business model. The Bellagio Hotel wants to be on the page when someone searches for four star hotels in Las Vegas, but it’s much less important for them to be on a FB profile page for someone that has a friend in Las Vegas.
There are lot’s of big sites that are working on solving the business model fit to product challenge. Facebook, YouTube and Twitter come to mind. I also think that companies that are heavily dependent upon advertising are realizing that that the business model fit to product may have not been as good as they thought.
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