[Photo by Jörg Angeli on Unsplash]
The Odysseus Files, Issue 27
Playing Your Own Game, Part 5
Are You Blending These Business Models?
[Note: this is Part 5 of a miniseries within the broader Odysseus Files called “Playing Your Own Game.” These miniseries will group broad topics thematically, helping you connect the dots between them more easily.]
TL;DR - Skip to the end for takeaways!
In the last couple of issues, I’ve challenged you to think bigger than the traditional creator model: to look for ways to leverage your ability to attract attention into an asset - separate from yourself - that you own equity in and can sell over and over.
This idea, stemming from the Billion Dollar Creator podcast by Nathan Barry and Rachel Rodgers, is how many big name celebrities are converting their career success into 8-, 9-, and 10-figure brands.
More than being about the money, this is about building based on principles - ones that add resilience to your business.
Embedded within this conversation, we highlighted a breakdown of the creator business model into a few very broad types. Obviously, creators often mix and match from these models: a coach will sell digital products as well as advertising or brand sponsorships in a newsletter, for example.
But there is a hidden cost to this, one that most creators haven’t considered.
Before jumping in to what that cost is, here’s a summary of those types once again:
Service Model
First, you have the service model. This, as the name implies, includes coaching, consulting, freelancing, etcetera. It’s a one-to-one model, requiring very little audience building. On your own, it’s not super scalable and is limited to trading your time for dollars.
If you want to build leverage using this model, your track will be to build an agency, hiring others to do the hands-on work.
Attention Model
Second, the attention model is based on building a large audience with the purpose of selling the attention you’ve gathered to someone else. This includes brand sponsorships, advertising, affiliate revenue, etcetera. Doing this well is based on being an entertainer - think celebrities or influencers leveraging their audiences’ attention to command fees for appearing in a brand’s promotional material.
While you only need a small, targeted audience with the service model, this one is all about audience growth and engagement. Leverage comes from size.
Content Model
The final model is the premium content one. As per the description, this one involves selling premium versions of the content you create, including books, courses, memberships, and any other format. This model is more profitable and detaches your time from your earnings. Like the attention model, it’s one-to-many (or possibly many-to-many if you run a community).
Financial success still stems from you showing up and continuing to create new content. But instead of optimizing for audience growth, if you are targeted enough you can make a good living serving a small audience. This gives you the space to focus on creating a quality experience for that audience.
The highest source of leverage in this model is to license or franchise your IP (intellectual property). This provides ongoing revenue, whether or not you show up. (It can also provide leverage to service providers, who develop a repeatable framework and offer certification to others to deliver that framework.)
Switching Costs
Business consultant Jessica Lackey sheds light on the consequence of “switching up” these models (you can read her full article here).
As she puts it, “There’s a cost-benefit tradeoff when you’re adding or shifting models, as each distinct model you add increases the overall cost and complexity in your business.”
Broadly speaking, some level of diversifying revenue streams is good, of course. The last thing you need is to be dependent on a single stream that, if it goes away, leaves you high and dry.
But the flipside of this is trying to do too much. Of diversifying too quickly.
A lot of creators feel the pressure to do this because they’re struggling to sell their current offers. So, they jump from thing to thing, creating a hodge-podge of products and revenue streams. Their business trades coherency for confusion, with no clear structure or thought-through journey for their customer to take.
In an interview between Jay Clouse (founder of Creator Science) and Nathan Barry (ConvertKit), Nathan explained his analogy of your business as either a strip mall or skyscraper.
The strip mall is when you have all these different products, business models, or revenue streams you’re promoting. There’s lots of choice, a lack of clarity, and way too much complexity trying to tie this sprawling mess together.
In contrast, the skyscraper is a single, focused structure that everything else feeds into. Nathan uses James Clear as an example: James spent years building a huge email list, without monetizing it. When he had to make something from it, he added quarterly habit workshops, but otherwise kept the focus on growing his list. This became his skyscraper.
(Read Jay’s article on this here.)
What Really Happens When You Mix Models?
So far we’ve explored the confusion, lack of focus (both for you and your customers), and complexity that comes with mixing models (and, more broadly, having too many moving parts in your business). But what else can go wrong?
In investing, the general principle is to hold whatever positions you take, avoiding the temptation to spread your resources too thin or to try and time the market. For example, if you only have limited resources to invest, spreading it across too many asset classes or companies will dilute your growth potential. Alternatively, jumping from one thing to the next time after time will kill any momentum you would have otherwise built. In both cases, you’re reducing the potential for compounding to work in your favor. There’s a reason why Berkshire Hathaway only owns 45 stocks, and of these, the top 10 make up 87% of the company’s holdings! (Source)
The point is, focus gives you momentum, which leads to compounding effects.
Focus in your offerings and business model provides a clear, streamlined ecosystem, where everything has its place and your marketing efforts have a singular emphasis. Everything you do is geared towards ONE CORE THING - giving that one thing the greatest opportunity to find success.
Beyond a lack of momentum, mixing models (too much) can have other effects. Your model shapes what you optimize for in your business. For example, if your primary revenue stream comes from advertising, brand sponsorships, or affiliate sales, your #1 objective is building a big audience whose attention you can sell, and demonstrating the clear KPIs necessary to keep your sponsors/advertisers coming back.
If you’re trying to mix this with your coaching or consulting business, which is based on having a small number of well-paying clients, you have competing objectives and focal points. Your efforts end up split in half, and you water down your ability to build either side of your business effectively.
Despite all this, there is clearly a place (and even need) for mixing these models, to some extent. For example, you might opt to leverage a service model (freelancing, coaching, etcetera) to monetize early, learn about your audience, or get some initial results under your belt before launching digital products.
So, what’s the best way to do this, while avoiding the pitfalls?
Simplifying Your Business Model
This is the time to revisit some fundamentals. One of the core tenets of The Odysseus Files and the Acropolis Model is that building the right foundation - from the beginning - makes all the difference.
This means reexamining your positioning strategy (what gap in the market you can fill and how you’re different from your competitors). Assess your brand values - and what type of business would result from staying closely aligned to those values. Consider what you really want out of your life and business; your life vision will set constraints around what kind of business you can run, thereby informing your business vision.
Try a journaling exercise: imagine what your business looks like in three, five, or 10 years. What’s your role in it? Who is your best customer? What do you do for them, to craft the experience they receive from working with you and to keep them coming back?
As you compile all of this together, your business’ purpose should start to come into focus. Out of the dozens of things you could be doing or offering, you’ll see one thing emerge.
Think of it like a building (or castle, if you’re in the Acropolis world). You have the core, load-bearing structure, then the surrounding support structure. In the same way, your “one thing” - your theme or “anchor” - is the core of your business model that you’re building towards.
(In our castle metaphor, think of this like the main keep - the primary residence and final layer of defense within the castle. Any other lesser models are like the other buildings within the castle. They have a use, but that use is geared towards supporting the keep.)
It’s your foundation, your anchor, so it drives your decision making around what to optimize for in your business.
Other revenue models (and the tactics supporting them) might play a minor, side role. Or they fit into a logical progression - like our example earlier about using a service-driven model to lay the groundwork for a product-driven model.
In both cases, these supporting models are not what you’re trying to build your business into - they’re just enabling you to get closer to that core theme.
Let’s put this into action to see what it looks like.
Choosing An Anchor for Your Business Model
Let’s say you’re a creator in a field where you strongly believe there’s a fundamental problem everyone is ignoring in your industry. You want to draw attention to it, and you have some solid ideas on how you’d go about correcting it. This is something you get very passionate about when it comes up in conversation, meaning you’re very persuasive face-to-face.
You could start a content-centered model, where you create a newsletter, podcast, or YouTube channel on your subject, and try to get advertisers to cover your costs. Maybe you add on a digital product followed by consulting on the backend. (This crosses three models, in case you’re counting.)
At its heart, though, your business’ purpose is to effect change in your industry. To start a movement. To persuade the most influential actors in your field to shift their thinking. This business is grounded in your expertise and is differentiated by your unique point of view.
A content-first model will likely take a very long time to gain traction towards this objective. Perhaps, instead, your business’ “anchor” could be public speaking.
It’s a model that is aligned with your strengths and stated values. It gives you the best chance of influencing the change you want to see. And it’s one that naturally gets you in front of the biggest names in your field while rapidly building your perceived expertise.
You will probably have a book and maybe a high priced consulting package on the backend for the occasional ambitious company willing to pay top dollar to have your framework customized to their business. You might eventually roll out a newsletter or podcast, although your new direction dictates a specific role for these content vehicles beyond just creating content about your subject. (Think of it like this: instead of trying to convince in your content, you persuade in your speeches and reinforce those ideas with evidence in your content.)
In other words, a lot of the “things” you do (at least, eventually) will likely be the same as in the first case above. But in this latter version, they all help reinforce and support the core structure - the expertise-driven, movement-shaping public speaking. Your audience becomes crystal clear: rather than being generally for everyone in your industry (whose attention is then passed on to a sponsor or advertiser), your primary customers are event organizers and industry leaders. Your secondary audience are event attendees, who are likely to be influential themselves, able to carry your ideas back to their own organizations.
When you’re ready to upgrade this into a more leveraged format, you can cement your unique perspective into a framework whose IP is an asset you own - and can lease out to others. Whether by training and certification (like creating mini franchises of your business) or by licensing out your IP, you can spread your ideas far beyond your own stage. You could even found a nonprofit organization (like an association) whose role is to promote and facilitate the implementation of your framework.
As you can see, this is a methodical approach that structures your business model around a clear vision and purpose, that has an end objective, that aligns everything within your business, and that makes deciding between tactics or possible offers easy and straightforward. Does this option or opportunity advance your company as an “XYZ category” of business? (Where the category is your core anchor or theme, such as speaking or digital products.) If so, build it in. If not, reject it as a distraction.
(I’ve been in the process of doing this myself these past few weeks.)
Ok, let’s wrap this up.
Wrapping Up
Giving considered thought to your business model - and how it aligns with your overall vision - early on is crucial. It can avoid a lot of wasted time and energy jumping from one thing to another, always unsure of what you SHOULD be doing but never getting any momentum.
Mixing and matching from multiple models equally in your business can divide your attention and efforts, and possibly even leave you optimizing for competing objectives.
Instead, choose one core model that will function like a load-bearing frame in a building. It holds everything up. Other revenue or business models you choose to incorporate are the supporting structures in your building - their primary job is to reinforce the core “anchor” model in your business.
These could support the primary model in one of two ways. Either it reinforces the main model (like book sales position a speaker as an expert so they can land more speaking gigs). Or it’s a chronological stepping stone on the way to the main model (like freelancing to cover the bills while growing a digital products business).
In either case, the core model - your business’ anchor, or main theme - is your main driver. It’s rooted in your vision, brand identity, and strategy. It shapes everything else you do, providing focus so that you can gather momentum. And it removes some of the complexity from your business, simplifying and streamline it.
P.S. - If this thought process is helpful at all, hit “reply” and let me know. As a brand coach, I’ve helped other entrepreneurs get clear on their models (by designing them to fit the entrepreneurs’ personal and business vision) and would love to help you with yours as well.