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The Customer-Funded Business: Start, Finance, or Grow Your Company with Your Customers' Cash

Book Description

Who needs investors?

More than two generations ago, the venture capital community - VCs, business angels, incubators and others - convinced the entrepreneurial world that writing business plans and raising venture capital constituted the twin centerpieces of entrepreneurial endeavor. They did so for good reasons: the sometimes astonishing returns they've delivered to their investors and the astonishingly large companies that their ecosystem has created.

But the vast majority of fast-growing companies never take any venture capital. So where does the money come from to start and grow their companies? From a much more agreeable and hospitable source, their customers. That's exactly what Michael Dell, Bill Gates and Banana Republic's Mel and Patricia Ziegler did to get their companies up and running and turn them into iconic brands.

In The Customer Funded Business, best-selling author John Mullins uncovers five novel approaches that scrappy and innovative 21st century entrepreneurs working in companies large and small have ingeniously adapted from their predecessors like Dell, Gates, and the Zieglers:

  • Matchmaker models (Airbnb)

  • Pay-in-advance models (Threadless)

  • Subscription models (TutorVista)

  • Scarcity models (Vente Privee)

  • Service-to-product models (GoViral)

  • Through the captivating stories of these and other inspiring companies from around the world, Mullins brings to life the five models and identifies the questions that angel or other investors will - and should! - ask of entrepreneurs or corporate innovators seeking to apply them. Drawing on in-depth interviews with entrepreneurs and investors who have actually put these models to use, Mullins goes on to address the key implementation issues that characterize each of the models: when to apply them, how best to apply them, and the pitfalls to watch out for.

    Whether you're an aspiring entrepreneur lacking the start-up capital you need, an early-stage entrepreneur trying to get your cash-starved venture into take-off mode, an intrapreneur seeking funding within an established company, or an angel investor or mentor who supports high-potential ventures, this book offers the most sure-footed path to starting, financing, or growing your venture.

    John Mullins is the author of The New Business Road Test and, with Randy Komisar, the widely acclaimed Getting to Plan B.

    Table of Contents

    1. Cover
    2. Praise for <i xmlns="" xmlns:epub="" xmlns:m="" xmlns:svg="" xmlns:ibooks="">The Customer-Funded Business</i>
    3. Title Page
    4. Copyright
    5. Why This Book?
    6. Chapter 1: Craving Crowdfunding? Pandering to VCs? Groveling to Your CFO?: The Magic of Traction and the Customer-Funded Revolution
      1. A Customer-Funded Model
      2. Customer Funding: The Vermas Are Not Alone
      3. A Problem: Financing Your Startup
      4. A Solution: The Magic of Traction
      5. Customer-Funded Models: The Five Types
      6. What Customer-Funded Models Have in Common
      7. Craving Crowdfunding? What This Book Is—and What It's Not
      8. Raising Capital Too Early: The Drawbacks Explained
      9. An Even Bigger Drawback: Bad Odds!
      10. So, Why Now? Is a Customer-Funded Revolution at Hand?
      11. Is Customer Funding the Right Approach for Every Venture?
      12. When Customer Funding Goes Wrong
      13. The Vermas: The Rest of the Story
      14. What Angel Investors Will Want to Know—and Will Ask
      15. The Road Ahead
    7. Chapter 2: Customer-Funded Models: Mirage or Mind-Set? Old or New?
      1. Financing Entrepreneurial Ventures: Nothing New
      2. From Dormitory Room to Dominance: The Customer-Funded Origins of Dell
      3. Banana Republic: From the Short-Armed Spanish Paratrooper Shirt to Trend-Setting Fashion Retailer
      4. Customer Funding: Mirage or Mind-Set?
      5. What Angel Investors Will Want to Know—and Will Ask
      6. Questions about You As an Individual
      7. Questions about Your Business Sense
      8. Questions about Your Target Markets and Marketing
      9. The Entrepreneurial Process
    8. Chapter 3: Buyers and Sellers, but Not Your Goods: Matchmaker Models
      1. From Airbeds on the Floor to Silicon Valley Darling: Airbnb
      2. Matchmaking Works for Dogs, Too: DogVacay
      3. A Missed Opportunity for a Customer-Funded Matchmaker Model: ProFounder
      4. What Angel Investors Will Want to Know—And Will Ask
      5. A Question for Your Angel Investor: Can They Follow Their Money and Lead You to More?
      6. Making Matchmaker Models Work
    9. Chapter 4: Ask for the Cash: Pay-in-Advance Models
      1. From a T-Shirt Design Competition to Crowdsourcing Poster Child: Threadless
      2. Bringing India's Mom-and-Pop Travel Agents into the Twenty-First Century:
      3. Loot Stores: From Small Consignment Retailer to 155 Stores—and Back Again!
      4. What Angel Investors Will Want to Know—and Will Ask
      5. Making Pay-in-Advance Models Work: Ask for the Cash, and for Good Terms, Too!
    10. Chapter 5: Recurring Revenue: Subscription and SaaS Models
      1. Subscription Models for Software: SaaS
      2. Educating the World from India: TutorVista
      3. Petals for the People and H.Bloom: Two Startups Come Together
      4. When Subscription Models Fail
      5. What Angel Investors Will Want to Know—and Will Ask
      6. Making Subscription and SaaS Models Work: Final Lessons
    11. Chapter 6: Sell Less, Earn More: Scarcity and Flash Sales Models
      1. Vente-privee Invents the Flash Sales Model
      2. Gilt Groupe: Large, Capital Efficient, and Growing, but Profitable?
      3. Totsy and Zulily: Flash Sales for Little Kids' Moms
      4. Lot18: Flash Sales for Wine
      5. Flash Sales: A Difficult Game
      6. What Angel Investors Will Want to Know—and Will Ask
      7. Making Scarcity Models Work: Three Final Lessons
    12. Chapter 7: Build It for One, Then Sell It to All: Service-to-Product Models
      1. From Services to Products at Microsoft
      2. GoViral Goes Viral
      3. From Typewriters and Carbon Paper to SaaS: Rock Solid
      4. How Else Might You Scale Your Services Business? QuEST Global Services
      5. What Angel Investors Will Want to Know—and Will Ask
      6. Making Service-to-Product Models Work
    13. Chapter 8: Make It Happen: Put a Customer-Funded Model to Work in Your Business
      1. Not Only for Startups: What Should I Do Now?
      2. Implementation: The When, the How, and the Likely Pitfalls of Each of the Five Models
      3. Points of Departure for Your Customer-Funded Journey
      4. So, What Are You Waiting For? Why Not Now?
    14. Acknowledgments
    15. Notes
    16. About the Research
    17. About the Author
    18. Index
    19. End User License Agreement