The customer funded business

The customer-funded business: start, finance, or grow your company with your The Customer-Funded Businessv2customers’ cash

John Mullins, Wiley

Starting, growing or financing a business with your customers’ cash isn’t a new idea – Banana Republic, Dell Computers and Airbnb, for example.

John Mullins PhD is a former entrepreneur who’s now a professor at London Business School, author of two best-selling business books and UK go-to man on entrepreneurial matters. John divides his time between London and Golden, Colorado, and is a frequent speaker to communities of entrepreneurs and their teams, CEOs of fast-growing companies and their investors.

Proving the product is preferable to pitching it.

It’s a bad idea to raise capital too early to fund a start-up, he says. It distracts time and energy from building the business, investors want too much involvement and the products that succeed are rarely the exact ones pitched to investors. Proving the product is preferable to pitching it, he argues.

It’s not about bootstrapping or crowdfunding; most of the ventures using these don’t raise a large amount of capital.

Five customer-funded models are laid out for start-ups or established businesses to use to start, grow or finance their businesses. Models range from matchmaker (Expedia, Airbnb) to pay in advance (consultants, consignment), service to product (Microsoft), subscription (India’s TutorVista, as well as magazines and newspapers) and scarcity (Zara, Vente Privée).

These are thoroughly researched, time-tested models that innovative companies around the globe use, without the need for venture capital. Great reading.

Jackey Coyle