Here are the 4 business shapes

0:00There are only four main types of businesses. So, your business is one of these four. So, that's why in this video I'm going to first go through what shape your business is, second, the problems and strengths of each shape, their trade-offs, and then third, how can you use the shape of your business to your advantage so you can grow as fast as possible. So, let's get started with the first shape. This is the shape of the commerce business. So, in the very beginning, you'll typically have to get some inventory, especially if you want to have a bigger business. No gigantic businesses are drop shipping. As soon as you start selling, because it doesn't require a lot of operational infrastructure, you can grow really quickly. But then you'll hit these breaking points that stop your growth flat. So, what sucks about this? So, you have core dependencies on other businesses, and if those businesses fail, you fail. So, the reason that this video is so important before I dive into all the other four, is that most people think that there is something inherently wrong with their business when it is in reality a feature of this business, not a bug. What's this puppy? So, this is the the the the puppy that 78% of businesses in the United States are based on, which is big bad service.

1:09Since they do have the potential for high margins, you sold work for 100 grand, your cost on that work was 50, and then there's 50 grand left over. And next month you're going to sell the same work for 100 grand, and it cost you 50, and there's another 50 left over. What sucks about this business? Talent is the bottom neck, right? You finding good people is going to be the difficult part of this business. The last piece is that it's just slower to scale than the other three months. That brings us to shape number three. So, quick guess, what do you think this is? This is an education consulting info media business. This shape scales faster than any other of the four shapes. You can notice that it's almost a straight line up. And so, this business makes money quickly, and then it hits a hard stop where it becomes very difficult to make it make more money from there. So, why is the shape this one? One of the most difficult parts about information or education related businesses, there is low retention. Your high school isn't like, "Oh my god, I can't believe we didn't retain that kid." The The goal is not to retain them, right? The goal is to actually graduate them. What sucks?

2:09Easy to compete, so it's double-edged sword, right? Many competitors, you also create your competition when you educate them. Retention is almost nothing, which brings us naturally to number four. And why is it this shape? So, software starts the slowest because you have to put a lot of capital in. You have to put people together, and you have to have people code for extended periods of time. Once you do have product market fit, the way that Y Combinator describes this is that getting product market fit is like pushing a boulder up the hill, and once you have it, it's like getting chased by the boulder on the other way down. So, that should give you a little bit of a mix of which one might be right for you, and what path you might be on.

2:43Here's the best part of all. I've owned all of them, and I've done well in all of them. And the best part is, life is long, you can change your mind later, because you can get out of that business. Then, if you've never started a business before, the likelihood the first business you start is the last business you'll own. is always the year.