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7 Fundamental Business Models



The Business Model Archetypes are seven fundamental business  “personalities” upon which any business model can be developed.  By providing the context of all available models, it becomes easier to see how businesses relate and directions in which businesses can pivot. In this article, we’ll discuss the model and the archetypes, as well as describe use patterns where the models might benefit entrepreneurs and product strategists who use the model.


The purpose of a business model is to concisely describe the function of your business within the overall market landscape, including details such as business inputs and dependencies, target customer base, and the value being created on behalf of those customers. By using such a conceptual construct for evaluating a business, strategists are able to more easily understand the function of the business, identify strengths, weaknesses, and opportunities, by comparing the attributes of other similar businesses who may be using a similar structural model.

While the concept is great, the value of such an exercise is lost on many product managers, who require something a bit more compact and immediately usable. There is a growing library of popular models that go by names like ‘Razor and Blades’ and ‘Network Effects Business’ which describe popular models that have been successfully used by other companies, but the knowledge is diffuse and there is little organization or context from which to easily discover and compare model options that may be appropriate for a business. The net result is that unless you have formally studied business strategy, there’s a good chance you are not aware of these known models, and thus the wisdom they represent is not leveraged. It is critical however for product managers to clearly articulate the function and contact of their business in the market.

business models

It was with this challenge in mind that a different approach was developed, called The Business Model Archetypes. The concept is derived from work by Carl Jung, the 20th century Psychiatrist who suggested there are fundamental personality templates from which we all inherit and combine attributes to create our own personalities. By understanding the fundamental templates he believed, you could better understand the personality of an individual, and predict their response to a variety of stimulus. He called this theory, the Personality Archetypes.

Jung’s concept is also relevant to the fundamental personalities of a business and provides an excellent structural base from which to identify the spectrum of possible templates. In the case of businesses, there are three primary personalities that describe the fundamental interests and activities of every business. And, similar to an additive color wheel, three secondary archetypes are derived by combing attributes of the three primary archetypes:

business model archetypes


  • Product – one time purchase of an artifact
  • Service – manually doing something and charging a fee
  • Trade – Connecting buyers and sellers for commerce


  • Brokerage – providing trade as a service
  • Subscription – productizing and semi-automating a service
  • Marketplace – productizing trade with a self-service platform
  • Ecosystem – Platform that combines all three (Mature)


These seven archetypes are high-level abstractions that describe basic truths about categories of businesses. This can be helpful for identifying a generalized context from which to determine where in the spectrum of possibilities to focus your efforts, but it is not specific enough to be actionable. For this, two prototypes were added to each of the model archetypes. A prototype is a more specific and functional demonstration of what is possible within a model archetype.

To demonstrate this idea, the Trade archetype has two prototype examples: eCommerce and Lead Generation. Both are examples of sourcing something of value and bringing it to the market for sale. In both cases, money is made on the spread between the cost of acquiring the item and what it can be sold for by the trader by taking it to market and promoting it. Similarly software and content are the two most common types of products to sell if you are an online business.

Being able to see the spectrum of structural options is a great place to begin thinking through the strategy of your business. Typically, teams will find they relate more strongly to one of the archetypes than the others, but while evaluating their options more closely, they might be able to reasonably pivot to the neighboring archetypes, providing additional opportunity and potentially even a more innovative and effective approach to their business. A well-connected Trader for example might find interest in expanding their business through a Brokerage model, by providing Dropship fulfillment of their products. Or they may be interested in building a category-leading brand online by establishing the go-to Marketplace for the types of products they specialize in.

The important point is to take the time to do the analysis and to understand the primary function of your business and to consider the possible variations on your theme that might be more optimal that what you’re currently doing. That is where the Business Model Archetypes framework is useful, by providing a conceptual framework with which to think through the possible opportunities you may not have considered. At the end of the day, every product manager be able to clearly articulate their business’s foundational strategy and to understand their context and expansion and pivot options – this framework provides a simplified method for achieving these goals.


Here’s a brief description of each of the archetypes to demonstrate further:




This primary archetype focuses on the development of a tangible artifact that can be bought and sold for a one-time cost. The product is usually consumed either because it provides personal entertainment, or because it offers some gain of efficiency and can be acquired for less cost than hiring a services company to perform an activity. When applied to the online world, the most common types of products are software in the form of plugins for major platforms such as WordPress, or content in the form of mobile apps of ebooks.Indicative Attributes

  • Key partners: Marketplaces
  • Value proposition: Productivity or entertainment
  • Key Activities: Product Development
  • Monetization: Sale of product




This secondary archetype is a popular blend of a product and a service. The most common examples are software as a service (SaaS) and Content as a Service (CaaS). Rather than buying a tangible product one time at a maximum cost, the subscription model provides continued access to the product or service for a lesser monthly cost, and continues to update, improve, and support the product over its lifetime. The benefit for the business is a reduction in up-front cost, reduced dependency upon a marketplace, and a continued relationship with the customer. For the customer, its also a way to reduce up-front cost, and ofte means having access to more and better resources than if they needed to purchase the tangible equivalent.Indicative Attributes

  • Key partners: Ecosystem platform owner
  • Value proposition: Customization and support of platform
  • Key Activities: Customization and maintenance
  • Monetization: Time and materials




The third primary archetype provides intangible solutions for customers and clients, where commoditized products are not sufficient. Often this is in the form of integration, maintenance, or customization of a popular platform solution. Usually this type of organization is formed by an organization of skilled professionals who sell their services for an hourly rate.Indicative Attributes

  • Key partners: Ecosystem platform owner
  • Value proposition: Customization and support of platform
  • Key Activities: Customization and maintenance
  • Monetization: Time and materials




This a secondary archetype which combines the activities of Trade and Service by trading on behalf of clients, as a service. These businesses typically service consumer-facing brands that focus on marketing and need assistance with more efficient sourcing. Prototype examples of this type of business include advertising networks which provide online traffic sourcing for brand retailers, and dropship programs which often have deeper sourcing relationships, and better fulfillment relationships than the brands they service.Indicative Attributes

  • Key partners: Wholesalers
  • Value proposition: Efficient commodity procurement
  • Key Activities: Recruiting Wholesalers
  • Monetization: Base fee plus commission


Trade Archetype


The primary archetype of Trade focuses on connecting buyers and sellers. Money is earned by buying a product for less than it IS sold for. The trader’s primary occupation is sourcing something of value “in the field”, packaging it, and making it readily available to those who desire it. Prototypical examples include the eCommerce retailer and lead generation. In both of these examples, the Trader sources something, qualifies and prepares it, then sells it to a customer. In the case of lead generation the behavior is the same as retail, except that the product is information about a customer prospect.Indicative Attributes

  • Key partners: Product sourcing and advertising
  • Value proposition: Low price, convenience, and curation
  • Key Activities: Sourcing and advertising
  • Monetization: Product arbitrage




The Marketplace is a secondary archetype that combines attributes of of the primary Trade and Product archetypes. It brings together buyers and sellers for trade, but it does o via self-service platform which itself is product. The product could be a physical shopping mall or an online technology platform that facilitates payment processing and statistical reporting. What is sold in a marketplace can either be tangible products or services. In both cases, the value and the efficacy of the marketplace is affected by Metcalfe’s law (aka Network Effects): the value of the network exponentially increases with every new node on the network. This can be a powerful dynamic that sustains a marketplace once critical mass is achieved, though it can also be rather difficult to reach critical mass to begin with.Indicative Attributes

  • Key partners: Merchants (sellers)
  • Value proposition: Destination shopping
  • Key Activities: Recruit vendors and advertise
  • Monetization: Commission per sale




The Ecosystem is the only Tertiary archetype in this model, in that it combines all three primary archetypes – Product, Service, and Trade. This is the rarest and most difficult archetype to achieve but is the more desirable. Success with one primary or secondary archetype behavior typically opens up the opportunity to extend the brand into complimentary and synergistic offerings. A product creator for example, may start to offer services in support of their product. If that too is successful, they may begin looking at how to facilitate marketplace activities and a host of other supportive behaviors. All of the synergistic activity helps to entrench the brand as a market leader, and adds to the value chain and perceived value of the customer. Typical prototype examples of an ecosystem are the technology platform (Salesforce CRM, Microsoft, etc) and the media platform (NBC, Facebook, etc).Indicative Attributes

  • Key partners: PaaS providers
  • Value proposition: Turnkey software and management
  • Key Activities: Develop software and manage servers
  • Monetization: Subscription fee


About the Author 

This article was produced by Smarter Startups. Smarter Startups began with the publishing of the book of the same name in 2013 and where authors Neal Cabage and Sonya Zhang, Phd continued to refined their thoughts. As for the book, it provides a comprehensive look at why some startups succeed while others fail and how to have a more predictable and reliable outcome. The book is available online and at major bookstores.


Why Angel Investors are Shaking Up the Global Startup Scene



Candace Johnson is someone who has made a global impact on our modern international telecom and broadcast business. She co-initiated the foundation of SES-Astra and SES Global, which today owns a fleet of 54 satellites and broadcasts 6500 TV channels. And she founded the world’s first Internet-based online service, Europe Online, making it into one of the first broadband Internet services.

But it was in her role as president of EBAN, the European trade association of several hundred business angels, which brought her to Eindhoven’s High Tech Campus recently. She explains why angel investors are making a difference to the global start-up scene and explodes several myths that surrounds the way they do business. She spoke with StartupDelta’s Jonathan Marks.

Building the match between angel investors and hardware startups

“People often think that angel investors are people who do investments around the corner, locally, or in services like e-commerce. To be frank, when the HTCE management told me that they were focussing on the hardware side of things, I was thrilled.”

“What I’m trying to do as President of EBAN, and having incubated MBAN (MENA Business Angels Network) and ABAN (African Business Angels Network) under my presidency, is to extend the scope of angel investments. The vast majority of angels are already tech savvy. But we need to educate our successful angel investors to invest more in hardware and infrastructure. We also need to help start-ups develop a pitch that speaks to the interests of angels, so they can get funding for their initiative.”

“We run the EBAN Training Institute with the goal of raising standards. We’re seeing more and more that the best angel investors are serial entrepreneurs. They bring their trusted network, expertise and experience to the table.”

“Money is important too, but it is not at the top of the list. Business angel investors are high net worth individuals who usually provide smaller amounts of finance (€25,000 to €500,000) at an earlier stage than many venture capital funds are able to invest. They are increasingly investing alongside seed venture capital funds.”

Angels are more important than most people know

“We follow the guidelines and standards developed by the European Venture Capital Association. For over seven years, during the depths of the financial crisis in 2008 until the recent recovery started, it was the angel investors who took over the role of early stage financing. More than €7.5 billion are being invested annually in Europe, with a sustained growth in recent years. Of that €5.5 billion comes from angels. In fact we have had to professionalize our profession to meet the demand of the growth in this early stage ecosystem.”

We always have an exit strategy

“Angel investors can only continue to invest if they have exits. I hear many people talk about investing. Only a few discuss exits. I want to change that. I also stress that proven entrepreneurial success is essential in order to become a member of our association. We need to ensure that useful “lessons learned” are shared with the start-ups. They are always based on hands-on real-world experience. We have no time for people who are using new blood to try and correct mistakes they made in their own failed companies.”

“EBAN was started in 1999 together with the European commission. For the first ten years, I think people were too focussed on the investing part. Now we need to focus on exits and returns on investment. Without returns, business angels are out of business. And remember there is only a short window of opportunity during which start-ups can scale-up to becoming global success stories”.

“Our feeling is that you should not make an investment in a company unless you can see the path for the exit. The exit may be a trade sale, an IPO, etc. The exit also does not have to be 100 %. It does, however, have to bring you a return on your investment so that you can continue to invest. This approach helps you focus on building great companies. There’s always competition in healthy markets, so no-one can afford to waste time. We’re not a charity; we’re doing this because we love building and financing global success stories. We’re therefore looking for companies with a real marketable product, not a prototype or a collection of well-presented ideas.”

Is there specific advice you can share with high-tech startups?

“In the last few years we’ve seen the rise of the accelerators alongside incubators. They have helped raise standards because a good idea needs to be validated by the market before it is the basis for a high-growth company.”

“As investors, we always need to see a start-up demonstrate that they have first clients and initial revenues. We’re not saying that they have had to scale or show market traction. But if we are going to put in our personal money, then we expect the founder to be resourceful enough to work out the first product, to have found the first clients and show us evidence of the first revenues.”

“The incubators who help get an idea into reality and the accelerators have been good at making startups better prepared for angel investment, offering the right coaching to turn an idea into a validated business. That means angel investors are better able to select the growth companies and focus on making a good return on their investment.”

Hanneke Stegweg

“We recognise that young companies need to present their business proposition to the angels attending our annual conference. So we’ve created ways that teams get immediate, honest feedback on the quality of their business presentation. We have one full day of preparation and coaching followed by a Global Investment Forum. The best go on to pitch to the entire network. This year, the “company to watch” category was won by Hanneke Stegweg, who is the Dutch CEO of the iLost company. Together with Neelie Kroes, I am keen to see more women founders lead entrepreneurial teams.”

What needs to change for things to move faster?

“We held this year’s EBAN congress in Eindhoven at the recommendation of several members. They all work in the innovation and financing of innovation field. But this region also came up in our discussions with StartupDelta. We have worked closely with Neelie Kroes when she was with the European Commission.”

“We were tipped off to the High Tech Campus specifically by our Russian members: the Russian Business Angels and the Skolkovo Foundation who are building the Skolkovo science park just outside Moscow.”

“And last, but not least, I know Eindhoven from my work in telecommunications and broadcasting hardware field. We often came here to work with Philips on the establishment of the DVD and MPEG-4 standards.”

“During our visit to the Brainport area it was clear that there is more than enough money in the region and a healthy appetite to invest in innovation. But there are some caveats that we feel need to be addressed.”

“Frankly, I think we are rather tired of the “nice-to-have” e-commerce companies. We would prefer to reinvest in world-class companies who are building something tangible, solving a real-world challenge. They need to demonstrate they can scale and become global.”

“We can see that the efforts by many have helped to raise the bar in the Netherlands and that’s good news for everyone. But remember there is a difference between entrepreneurs and SME’s. Entrepreneurs are the only ones to change our world. They create large companies, worthwhile employment, and that grows into large revenues.”

Failure is not an option

“We should get rid of this talk of failure being an option. If you’re taking angel money, it is NOT OK to fail.”

“If you take third party money, you have a responsibility as an entrepreneur to do everything you can to make a return on the investment of your business angel. The media keeps talking about friends, family and fools. But that’s nonsense! Founders, families and friends build great companies!”

“I have always been a free marketer at heart. Europe and The Netherlands need to create nations of investors. I believe in the power of private sector-led investment. Government needs to follow the leads set by business angels, not the other way round. We are investing our own money and using our years of experience to scale up these companies. An entrepreneur who is not willing to work and dedicate her or his lives 24/7 to achieve the goal should look elsewhere for money!”

“We’re fortunate that the EBAN network acts as a magnet for excellence. We were honoured to have the President of the European Research Council and the Head of Technology Transfer of the European Space Agency address our Congress to show us where the technology trends are going and where we should invest.”

“From a venture and entrepreneurial financing perspective, we were most grateful to our colleagues from the United States who joined with our European, MENA, and African colleagues to set the bar high in creating, building and financing global success stories. Amongst those joining us in Eindhoven from the United States were the president of the Global Accelerator Network from the USA, the president emeritus of the Angel Capital Association of the USA, the President of Start-Up Angels and Board Member of Up Global from the USA. We also welcomed the President Emeritus of the Crowd funding association of the US as well as the chairman of New York Angels. And we were delighted with the presence of David S. Rose, the president of These are some of the world’s best experts in angel investing.”

“They all said they were pleasantly surprised by the high standard of the startups that came to Eindhoven from all over the world. It was well above what they had expected. Start-ups from Africa, Middle East and Europe traditionally explain what they do, rather than explaining to investors why their idea is important. But that’s changing rapidly for the better. Entrepreneurs are also getting better at defining what they need in order to scale-up.”

NEXT STEPS : It’s all about active networking

“I should explain that in expanding our reach in Europe, with have formed alliances with the European Space Agency and the European Research Council. They also have their own accelerators and incubators. I think the onus is on the angel investor community to help bring this scientific community to a higher level of entrepreneurship. They need to think about the market for their inventions from the beginning. I believe we can help these organisations filter out the very best ideas and give those the attention they need to scale ideas into real businesses. There needs to be a validated market need for the technology they are developing.”

“We have two main events. There is the annual EBAN congress, this year in Eindhoven and next year in Porto, Portugal. And we run the EBAN Winter University, this year running from November 17–19th in Copenhagen. We’re doing this with leading organisations active in Europe’s creative industries. And all this is in addition to individual events and competitions organised by EBAN members at a local, regional and national level.

Increasingly we’re assembling cross-border syndicates, both between European countries and increasingly inter-continental networks linking Europe with innovation hubs in Africa, Middle East and North America. As companies scale and go global, it is important they have access to an international shareholder network. It’s a softer landing when they cross continents.

We also believe there is a way in which we can build partnerships with techno-business parks around the globe, led by the flywheel initiatives shown by High Tech Campus Eindhoven over these very fruitful days in the Netherlands.


About the Author

This article was written by Jonathan Marks, Executive Director at Photon Delta. See more.

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Myths & Facts about Entrepreneurship



Today, there is a pervasive and nearly deafening mantra insisting that you quit your job and become an entrepreneur. The collective says you should do it today because every day you wait brings you closer to a life of poverty and regret.

A central theme in the entrepreneurial world is challenging the status quo and questioning conventional wisdom in search of new and better ways of doing things. If you’re just going to follow the pack, you may as well just get a real job and call it a day.

Entrepreneurship can be incredibly rewarding. Starting your own business may be the best decision you ever make. But it’s not for everyone. There’s a lot to consider before you take the plunge and a lot of myths to expose, starting with these.

Let’s take a glance at some of the Myths of entrepreneurship:

1. You’ll be Happier

Entrepreneurship can be incredibly rewarding. Starting your own business may be the best decision you ever make. But it’s not for everyone. There’s a lot to consider before you take the plunge and a lot of myths to expose, starting with these.

2. You’ll have more freedom, control and work-life balance

If you’re on your own, chances are you’re going to find yourself wearing all sorts of hats and working 24×7 for a very long time. Work will become your life. There’s nothing wrong with that, but not everyone feels more freedom and control that way.

3.You’ll be more fulfilled

Do we know what just about everyone loves to do? Great work that accomplishes goals they can be proud of. One can do that working for a big company, a small company, or their own company. Fulfillment has nothing to do with business ownership. If one wants to manage, lead, or run a business, it’s better off learning the ropes in a good company before starting your own.

4.There are no jobs; technology and outsourcing killed them all

It is shockingly untrue. If technology destroyed jobs, then which one will you call the most lucrative and fastest-growing industry on the face of the earth.That’s right: technology. If you can’t find a job, chances are you lack in-demand skills or education, in which case, yes, you might want to consider starting a small business which does not require much of exclusive skill sets in particular.

5.Entrepreneurs Live a Glamorous Lifestyle

That’s again untrue. Most entrepreneurs do not live a glamorous lifestyle; if they do, their investors should cringe. Entrepreneurs are notoriously frugal, hard working and opportunity-obsessed with little time for outside activities. These qualities are not hallmarks of the glamorous life.

Now,Let’s look at some of the facts of entrepreneurship.

  1. Most successful entrepreneurs succeed by exceptional execution of ordinary ideas: See Jiffy Lube, Starbucks and Charles Schwab.
  2. Most successful entrepreneurs concentrate on minimizing risk rather than taking huge risk at the time of starting their companies.
  3. Successful entrepreneurs use their innovative passion in many ways, such as buying companies, creating new ventures within larger companies and re-strategising nonprofits.
  4. More than 80 percent of new ventures are boot-strapped from personal savings, credit cards, second mortgages and the like. The median start-up capital is about $10,000. Waste Management began with a single truck; Sam Walton started with $5,000. So, in short access capital is not required to startup.
  5. Being first to execute well and delight customers is not at all important for success. A lot of startups have entered quite late in a particular startup industry and have done well.


About the Author

This article was written by Utkarsh Sharma.

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