This week, I’ll be talking about how I came up with the business model for One Work. I used a tool called the Business Model Canvas to visualize the business model; you can find a copy of the canvas on Wikipedia, and if you want to learn more about it, check out the book Business Model Generation.
Defining the business model was one of the first tasks I worked on because it helped me focus on how the company operates, including who my customers are, what value I was providing to them, and how I would make money. The Business Model Canvas has the added benefit of showing the relationship between these areas; for example, the Revenue Streams could change depending on the Customer Segments and what kind of Customer Relationships you want to foster with your users.
With the Business Model Canvas filled out, I could start to dig into the individual strategies of how to build the platform, how to acquire customers, how to set the right price, and so on.
Let’s talk about the different blocks on the Business Model Canvas. I’ll use a fictional toy company as an example to make the the concepts concrete:
- Value Proposition: This is what you are offering to the customer, e.g. high-quality wooden toys.
- Channels: These are how you reach your customer to deliver the Value Proposition, e.g. retail stores, direct to consumer through a website, affiliate marketing.
- Customer Segments: These are the people who buy your product or service, e.g. middle- and upper-class parents and grandparents of children ages 2 to 9.
- Customer Relationship: This is how you establish and maintain a relationship with your customer, e.g. self-service help on the website.
- Key Activities: These are the things you do in order to create the Value Proposition, e.g. design and manufacture toys, establish wholesale contracts.
- Key Resources: These are the things you need in order to support the Key Activities, e.g. experienced toy designers and woodworkers, woodworking tools.
- Key Partners: These are the other people you partner with for support, e.g. overseas parts manufacturers.
- Revenue Streams: This is how you are paid for the Value Proposition, e.g. wholesale contracts for quantity orders, direct consumer sales.
- Cost Structure: This is what you spend money on to generate the Key Resources and Key Activities, e.g. labor costs, rent, payments processing system.
For One Work, I wanted to build a job seeking website that would help people find jobs that aligned to their personal missions. If you asked ten people how they would solve that problem, you’d probably get ten different answers. With that in mind, I decided to ideate on as many business models and parts of business models as I could. I’d compare the process to photography, where you take dozens of pictures to make sure you get the perfect shot.
These were the business model ideas I came up with:
- Reverse Recruiting: In this model, job seekers pay a fee for someone to recommend jobs to them. The underlying premise is that no one enjoys looking for a job, so let someone else look for you.
- Reverse Recruiting Gig Economy: Job seekers pay a fee for recommendations. We use that fee to pay gig workers to make the recommendations. Think of it like Uber, but instead of driver partners they are recruiter partners.
- Job Seeker Subsidized: Hiring managers pay to post a job, and the resulting revenue helps subsidize the cost of having job seekers on the platform for free. This is what most major job seeking websites do these days.
- Advertising for All: Everyone is on the platform for free, and we serve ads to users to generate revenue. Everyone likes ads, right? Right?
- Flat Rate Hire: A job seeker or hiring manager pays a flat fee to make a match, and if we don’t find one, they get their money back. This seemed like an excellent value proposition if we could find a way to make it work, but insufficient job seekers or job postings would doom the company.
- Job Seeking Social Network: Finding a job or hiring someone is usually a transactional experience, but in this model we would emphasize long-term engagement and treat users as members. The model fits somewhere between Indeed (purely transactional) and LinkedIn (collect-a-connection behavior) to focus on quality long-term relationships.
- Early Career Hires: Instead of appealing to everyone, try to appeal to the unique needs of early career hires and the companies hiring them. The idea behind this model is an assumption that early career hires are more likely to resonate with the concept of a personal mission and leaving the world a better place than they found it.
- Freemium Recommendations: Create a tiered pricing structure for job seekers where anyone can create a profile for free but only premium members can search jobs and get personalized recommendations.
- Platform Licensing: This is a B2B play (business to business) where we license the One Work platform to be used as the hiring framework on another company’s website. This addresses an issue where someone knows they want to work for a given company, so they go directly to their careers page; in doing so, the company misses out on One Work features for hiring a great fit.
The business models above share a similar value proposition, but there are a lot of different approaches at play. Whenever you are going to make a foundational decision, consider divergent thinking! Write down everything that comes to mind, even if you’re not thrilled about it. I absolutely hate the idea of serving ads to people, but I still captured the idea.
For each one of the business models, I also wrote down key assumptions, strengths, and weaknesses of the model. For example, the Early Career Hires model had this assumption:
Early career hires have an especially strong connection to culture and values and want to work on something purposeful at a company that cares about them as people.
That’s an important assumption to validate, because if it proves false, the model falls apart. In that sense, capturing key assumptions, strengths, and weaknesses helps identify some of the risks and opportunities in the model.
In the end, I came up with this canvas based on ideas from the Job Seeker Subsidized, Job Seeking Social Network, and Early Career Hires models:
It synthesized some of the ideas that I liked the most:
- Long-term engagement on the platform (this is critical for the company vision, which I’ll write about later)
- Subsidizing membership costs for the majority of users
- Targeting a niche rather than trying to be everything to everyone
You can start to see some hints at a business strategy in those three ideas. In my mind, that’s the key benefit of going through this exercise. You begin to understand not just what you need to build (the value proposition) but everything else that needs to be in place to support it. In fact, the majority of the Business Model Canvas is dedicated to something other than the product or service; later on, I’ll write about how an understanding of those other areas influences how I approach the design.
More to come! Feel free to provide feedback on One Work or anything I write about; I’d be interested to hear if others have gone through similar exercises in the past.
Do something great today!