The co-op business model: share whatever you’ve got
2011-11-20The only business I’ve ever done is the co-op / sharing model. It goes like this:
- You have something that people want. It might be something you own, something you’ve learned how to do, or access to resources, space, or people.
- Find a way to share it with everyone who needs it. Not necessarily for profit, but just because it’s what you’d do for friends, and it’s the right thing to do.
- If it takes some effort for you to share it, charge a little something for your effort, to ensure that this giving can continue.
My examples:
Copyright forms: In 1994, the U.S. Copyright office still didn’t have their copyright forms online. To copyright your song, you had to mail a letter to Washington DC, to ask them to mail you the blank forms. So I scanned the forms and put them on my website for free. For the next two years, my site was the only place to get those forms online.
Trademark instructions: In 1995, I learned how to trademark my band name. It took many hours of work to figure out the legalese, but I did it. I wrote out the step-by-step instructions and put them on my band’s website for free. For years it was the go-to resource for musicians who wanted to trademark their name.
UPC barcodes: In 1996, I had a little record label, so I got a UPC barcode account, which let me put unique UPC barcodes on my CDs. I had to pay $750 to the Universal Code Council to get a company account, but that meant I was allowed to create 100,000 products under my account. Musician friends asked how, so I showed them how, but also said they could use one of mine. At first, I did this for free, as a favor, until friends started sending strangers my way. Because it took some work to generate the number, create their barcode, and keep records, I charged $20. Over the next 12 years, that made me about $2 million.
CD Baby: In 1997, sharing my credit card merchant account led to CD Baby. Over the next 12 years, that made me about $20 million.
Web hosting: By 1999, I had learned a lot about hosting websites. Linux, Apache, PHP, SQL, FTP, DNS, SMTP, etc. I had done it for my own sites, and bought my own servers. So when friends would complain about their existing web-hosting company, I’d host them on my servers instead. At first, I did this for free, as a favor, until it was filling up my server. Because each server cost me $300/month, I charged $20 per month. Over the next 9 years, that made me about $5 million.
None of these things looked like a business venture, at first. All of them were just sharing something I already had.
People often ask me if I have any suggestions for what kind of business they should get into. I tell them the only thing I know how to recommend:
Start by sharing whatever you’ve got.