RSVPD

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To bring it all together: if you get a great business model, it is going to be like that invitation you cannot help but RSVP to. That is the mnemonic, RSVPD:

• Repeatable: customers keep buying, and you do not have to reinvent your business model for every customer.
• Scalable (with leverage): you can go from zero to a million users without changing it, and every time you add a user you get leverage, the virtuous circle.
• Valuable: the way you create it is very effective (for example from a community, or making it easy to sell through partners), so you add value with your multipliers and levers.
• Predictable: like the Symantec subscription that told us what our revenue would be, versus the horror of old-style sales models where you close the quarter in the 24th hour of the last day. Predictable businesses are far more valuable (companies lose billions overnight when they miss quarters), and this is one reason to build recurring, subscription models.
• Disruptive: you are doing something nobody else could do. Open source disrupted traditional software stacks; the ad model disrupted them too (Google gives its apps away and caused Microsoft’s stock to be a dial tone for nearly a decade). That is what business models do.
• Defensible: you build a moat around it with things like your network, so even a competitor with better features cannot dislodge you.

And the bottom line of an RSVPD model is that it works for both you and your customer, if you design it right.

Look back just 20 years and you see how disruptive and much more valuable these models have become. In the 1990s, software was installed and customized by IT shops, infrequently upgraded, mostly proprietary and license-based, with everything paid up front, so long sales cycles and huge cost of customer acquisition. Today everything can be web-based, self-service, on demand, open-source, and subscription: much more predictable, and therefore, in the RSVPD sense, much more valuable. So even though none of you wants to go backward 20 years, go forward 20 years and think about your next chance to come up with a set of highly disruptive and highly valuable business models this way.