

Ask YC: Should a startup's business model be kept secret? - iamwil

While most startups are focused on making something people want and getting users, they might have half an eye on a business model.<p>The thing is, should business models (whether it's advertising, a buyout, etc.) be kept secret?
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antiismist
Depends. I can think of some business models that would offend your users if
they knew about them, so they should not be publicized (whether they should be
pursued at all is something else):

\- planned obsolescence (cars, electronics)

\- vendor lock in (iPod/iTunes, MSFT Office)

\- selling personal information (magazines, social networking apps)

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aschobel
Great article I found on /. a few years back which I still find relevant
today, Cult of the NDA:

<http://www.frozennorth.org/C509291565/E1939404619/>

"To all those entrepreneurs with innovative, unique business ideas who want to
capitalize on them before someone else does, I have one piece of advice: Get
over it. "

You have a lot to gain by bouncing ideas off of friends and getting some
honest feedback. Why deprive yourself of that?

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tygergolf
Unless a business model is truly (REALLY truly) innovative, there shouldn't be
any reason to keep it secret--users care about the product and its cost (be it
monetary or otherwise) to them, investors would be silly to invest were they
not aware of the models, and even in many cases of an innovative model, the
model itself may draw added attention. There are obviously exceptions, but
generally speaking I think startups have bigger things to worry about than who
knows what their business model is.

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iamwil
Right, it makes sense to tell investors--otherwise, they'd be crazy to just
throw money at you.

So far, I find that there really isn't much to keep secret. The only things
that people seem to keep secret are technological sauce, # of users, amount of
income, and future plans, are what come to mind.

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nextmoveone
Call me stupid but I don't get the whole "People love my product, but I don't
know how I will make money..."

 _HOW IS IT A BUSINESS IF YOU CANT MAKE MONEY?_

I tend to take a more traditional approach to considering my idea's as
businesses. If there is no cut & dry method of monetization I don't waste
anymore time on it.

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pg
The solution to the conundrum: don't know != can't.

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nextmoveone
Of course, but why waste time on something you "don't know" will work.

Why not optimize on time and go with something that will work ( that can make
money ), and save those hours spent on the "cool free thing" for later (aka
your own time). It's just _one less problem_ in the future.

At least in my opinion. I mean viaweb had idea of how they (you) were going to
make money right?

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pg
_why waste time on something you "don't know" will work_

For the same reason that I'm willing to fly to any large airport without
knowing for sure that there will be a taxi waiting. There almost always is.
And there almost always is a way to make money out of anything a lot of people
find useful.

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nextmoveone
Reflected on that for a minute and I'd say you are right.

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noodle
unless you're doing something truly unique with it or by giving it away you
give away your startup's idea which itself might be somehow secretive, why
bother keeping it secret? seems like it would be more of a hindrance than a
benefit

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PStamatiou
ie, if you have a patent pending on it.. keep it secret until then.

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simianstyle
No, someone has probably tried it before.

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rokhayakebe
this is the same as the "are ideas worthless?" debate. Your business model is
nothing more than "your idea of how you will generate income". therefore some
may think it is only as valuable as your experience and your credibility. a
buyout is an exit not a business model. your plan will remain secret as long
as you are not making money. my advice is tell your investors how you will
make money if they ask, and let anyone else figure it out on their own.

