Wacky Business Models

A reader sends this one in, after reading my book BMOC.  One of the characters in the book is a business man who has a knack for monetizing wacky business models  (one example:  providing free fountains to malls in exchange for being able to harvest the coins out of them).  The book is named after his new company called BMOC, which specializes in making teens popular.

This caused a reader to send me this web site for FakeYourSpace.com.  They are selling popularity their own way, by providing you comments and visits from hot and cool friends on your MySpace pages.  Sort of sock puppetry for teens.

Welcome to Fake Your Space. You have found a new and
exciting service which offers help to all the men and women out there
who don't feel like they are popular enough on social networking sites
such as MySpace, Facebook, and Friendster.
If you are tired of seeing everyone else with the hottest friends and
want some hotties of your own, then this is the place for you.

LOL.  Wish I had thought of it for my book.  Below the fold is the business model for BMOC, which I thought was crazy enough:

From Chapter 5 of BMOC:

....So that is when Susan, more
relaxed, asked what the hell BMOC did.

"Let me answer a question
with a question," Marsh began his explanation.  "When TV
and radio and magazines sell to teenagers, what are they selling?"

Christ, thought Susan, tricked again.  One of the pretensions of many
interviewers at HBS was that they liked to formulate a short verbal
business case for you to solve.  This always struck her as bizarre "“
if there was anything an HBS grad had been taught to do, it
was to analyze and talk about a case.  Thinking of Julian, Susan
decided that if she was going to interview HBS students, she would
instead focus on the question of whether the student had any friggin'
real-world common sense.  She had taken this interview in large part
because it promised to be different than all the rest, and here Marsh
went with the case BS.

"Well, they sell a lot of
cosmetics, and clothes, and CD's," Susan answered.

that's right, but I did not ask my question well.  Put yourself
in the teenager's shoes.  The ads they see "¦ what are
they really selling.  For example, when a teenage girl buys a
hot new outfit, what is she really buying?"

"Hmmm.  Positive comments
from her friends; an aura of being cool; popularity, I suppose."

"EXACTLY!  When the media
advertises to teens it is selling popularity!  Taken that way, the
teenage popularity business is enormous, literally hundreds of
billions of dollars a year.  One day, I asked myself: Why so
indirect?  They are selling popularity, but they are doing it via a
lipstick sale.  That seemed terribly inefficient to me.  If teenagers
want to buy popularity, why not let them do it directly?"

"Excuse me?  You can't
sell popularity off a rack."

"Ahh, but you can.  The
name "˜BMOC' stands for "˜Big Man On Campus.'
That name, by the way, is one of the reasons you are here "“
more on that later.  For a fee, we guarantee to make teenagers

Susan thought about this for a
minute.  Was this a trick?  Was this some elaborate case where the
key is not to get suckered into accepting such a bizarre business
model?  She temporized with a question.  "What does BMOC
actually do to make kids popular?  Is it something like wardrobe
consulting, helping the dorky kids to dress cooler and maybe take a
bath once in a while, that sort of thing?"

"Well, that's part
of it, but probably not the most important part.  The keys to our
business model's success are our Local School Operatives, or
LSO's as we call them.  We go into area high schools and seek
out and recruit the coolest, most popular people.  We keep them on
retainer, paying them a bonus when we have a client at their school
that they can help to become popular.  In many cases it's
surprisingly easy "“ invite the client to sit with them at
lunch, to join them on dates, that sort of thing.  We can guarantee
popularity, because we literally have the local teenage opinion
makers on our payroll."

Susan smiled.  OK, this had to
be fake.  This is all a hypothetical case.  The game was to find the
fatal flaw.  And she was pretty sure she knew what it was.

"I can't see the P&L
working.  Keeping all of these kids on retainer, plus the bonuses you
pay them.  I just can't see it making a profit, unless your
fees are very, very high or you don't pay your student
representatives very much."

"Ahh, a good point, and
you've hit on our other innovation.  First, you are correct, we
charge high fees now, though as we grow with economies of scale, we
expect to be able to charge much less.  The real innovation, though
is"¦ do you know what a product placement is?"

"Sure.  It's when a
company pays to get their product into a TV show or movie "“
like when Reese's pieces were used in the movie ET or I guess
if you showed Seabiscuit eating Purina Horse Chow."

"Exactly!  And product
placements are particularly effective.  They act like an ad but they
can't be ignored like an ad.  Anyway, we have taken product
placements one step further:  We get paid by major manufacturers to
place their products not in movies but in the hands of the most
popular kids in high school, the ones who really lead opinion as to
what's cool and not cool who we"¦"

"Who you happen to have on
retainer anyway."

"Exactly.  But be careful
how you think about "˜on retainer.'  The natural reaction
is to assume this means money, but in our case it's not.  We
keep the most popular people on retainer merely by "¦"

"Giving them free
products," Susan interrupted again, with growing excitement,
"that manufacturers are already paying you to put in their
hands."  Marsh nodded, with a big smug smile on his face.
Shit, this wasn't a joke, Susan thought to herself.  It might
in fact be brilliant.  It served advertisers better by putting their
product in the hands of those that really drive teenage opinion.  And
it served teens better, by giving them a clearer, more direct path to
their goal of popularity.  And both paid money to BMOC for the
privilege.  This really could work.  She saw the implications of this
approach immediately.....

Buy the book BMOC

One Comment

  1. Noumenon:

    I'm surprised I never saw you tell what BMOC was about before. It's a great premise.