Feb 26, 2021 | 5 "Best" Business Models in the World
Do Unflappable Businesses Exist?
I play a role of a business developer for my own company, but I’m also interested in the history of modern business development in a broader sense. It’s fascinating in how many different ways one can develop a company! I’ve seen lots of examples from companies developing in my circles, but also from the media, and from the global village that we are all parts of.
And, I enjoy every story, from the paths to global success such as the history of Apple to the most shameful examples such as the infamous FYRE festival or the story behind Theranos. I also observed some con art in daily life (as mentioned in the post “How (Not) to Do Business“). Sometimes, it’s good to get familiar with such examples — not necessarily to absorb this particular school of thought but rather, to better understand human psychology and cognitive errors that we all fall into.
But sometimes, it also puts you in a reflective mood when you think about how many working businesses in the real world produce nothing and run on unflappable business models that just can’t fail no matter what. When you try to see things as they really are and understand them to the core, quite often, you discover that there is absolutely nothing at the core.
In this post, I’d like to mention examples of 5 genius business models that just can’t fail regardless of the quality of service they provide.
1. Mensa Association, and Any Other Society Using Measures to Let Members in and Charging for Participation.
This is how it works. You can apply to take a test, which you need to pay for. If you get accepted as a member, you also need to pay an annual fee for the rest of your life — or at least, for as long as you wish to call yourself intelligent (currently, $79/year in the US, and varying rates in other countries). From what I remember — and it was 18 years ago when I took the test, so it’s been a while! — they use the classic Raven’s Progressive Matrices Test for testing applicants. This means that they didn’t even design their own test but rather, built the whole model on the intellectual property that existed before. I don’t know what overheads might justify such a lavish annual fee, especially in times of corona when all the events happen online. One can read on the MENSA’s main website that the association is run by a so-called Mensa International Limited — which sounds like a company rather than a foundation to me. It means that some private company takes profits from the fact that some intelligent people (well, intelligent IQ-wise!) like to call themselves intelligent. That’s the whole model.
I sometimes think to myself: Why don’t I make a test that assesses kindness in people, and start charging a membership fee for being a member of a community of 2% kindest people in the world? The sales pitch wouldn’t be too hard I suppose. “If you are in the club, employers will fight for you!” — should do.
2. ISBN Numbers.
This model relates to the previous one. ISBNs are codes that can identify a book or any other type of content you wish to identify. For some reason, the only institution that has the rights to release ISBN numbers is the International ISBN Agency operated by International ISBN Agency Limited registered in England and Wales. The funny thing is that one ISBN number costs about 100 EUR and it’s nothing else than just a number. You can get online in five minutes, by typing in the basic data related to your book. Why do we pay some private companies by giving us natural numbers?? If I create another standard of numbering books and set the price to 10 EUR in place of 100, will the millions of book authors switch to my system? And who gave a private company the right to identify all the human heritage in the first place?
Unlike the MENSA association, I have never been a member of the church of Scientology. Therefore, I can only judge what I see from the media and reports from former members — I’m sorry if I didn’t grasp something there.
So, from what I know, the business model of Scientology boils down to putting pairs of members alone in the room so that they coach a.k.a. audit each other using “E-meter” — a simple machine messing the galvanic skin response. This response allows for tracking the stress level of the measured person and helps you coach someone even in a situation when you have no formal training to do so. Scientologists disrespect the basic laws of physics and associate “E-meter” recordings with active of supernatural creatures called operating thetans. If you ask me what it means, well, it’s complicated. Perhaps this episode of South Park will showcase best what it means.
Anyway, the model based on putting two strangers against each other, letting them coach each other, and charging them both for it, is quite genius. If not the greed of the church principals who can go any lengths to increase the profits — including recording these pairwise confidential conversations to gain an additional advantage in further negotiations. Blackmailing people, and physical violence — it might be a weirdly functioning business model.
Mind that many online support communities work the same way — everyone pays for the entrance, and then people join one platform to support each other and solve each other’s problems by themselves. The creators of some of these communities do provide some original added value to their members while others don’t.
4. Investment Advice.
Well, this model is a winner, but it’s not for everyone — it only works for those who are influential enough to move the price of an asset that they support. The scenario is always the same.
Step #1: You slowly and silently buy into an asset of a high vulnerability.
Step #2: You sell your investment advice to a group of people, in any way, shape, or form — as a course, access to a closed seminar, a document, etc. You instruct them not to share this secret knowledge with anyone while in fact, you secretly wish that they do, as the more people get your advice, the better for you.
Step #3: You wait for your clients to buy into the asset as long as it takes that the assets reach the price satisfactory to you.
Step #4: You sell your asset at the desired profit level.
Step #5: You explain to your clients that they lost money because they didn’t buy soon enough, they didn’t sell soon enough, or for whatever other arbitrary reason — and you soother them saying that the next time, they will make profits. Alternatively, you can also say that it’s a long-term game and that they have to think about their investments perspectively.
Usually, people who lose from investing in speculative assets are too ashamed to admit their loss in public, so only the lucky clients will speak up and announce their gains — making an impression that the losers are exceptions.
5. Your Own Country.
I’m always amazed by how the Dutch tax office works. I got a call from them today. The gentleman on the phone asked me about the question I had for them when I called his colleague two days ago. It wouldn’t be any weird if not the fact that two days before I called them with a very simple question and the assistant wrote my question down as she didn’t know. Well, today’s assistant didn’t get the question from the previous one so I had to patiently repeat the process. After I explained my problem, the assistant on the phone told me with a smile: “I don’t know. Ask your tax advisor.” So, I said, “My adviser doesn’t know. Well, who knows then?” He said, “I don’t know. I’ll pass your question to someone in Heerlen so they answer.” So I asked, “When can I expect the answer?” He started laughing at me. “Why would I know that, ma’am?” I asked him if he doesn’t see anything weird in the fact that his salary is paid from my taxes and that he doesn’t do his job. He answered that I’m impolite and that if I don’t change the tone, he will need to finish the phone call. Of course, the tax office always calls you from a protected number and the assistants don’t introduce themselves. Thus, you don’t know whom you are speaking to and you can’t call them back. It was also not the first time when calling the tax office ended like this. Pretty much every time it goes the same way — they openly tell you that they don’t know anything, and they are happy about it. The problem is: some part of the information is not available online, and if you make a mistake in your taxes, you will be charged a high fine. In other words, if you make a mistake, all of a sudden they will become tax experts.
I thought about this one a lot. If you create your own country, you can just collect a part of your citizen’s money as income and corporate taxes and do absolutely nothing with some good chunk of this money. What can they do about it? Nothing.
And where does this money even go to? In principle, it goes to an army of officers that more often than not, don’t produce any value. For any utilities, such as healthcare, roads, municipality expenses etc., you need to pay extra anyway through separate taxes and bills.
And that’s yet another genius business model. Just stick a flag in the ground, tell people, “hey, we are all equal here! We have freedom of speech, religion, and orientation. You are welcome to live here with me, you just need to pay 40+ % of our income in taxes.” And the money is yours!
The 5 “Best” Business Models in the World — Does the List End Here?
As you can see, there are business models that guarantee income no matter what — whether your conscience lets you do it is quite a different story. What surprises me the most is that there are so many dysfunctional yet working models and that people keep on buying into them without even realizing how empty the service is. Do you know similar examples? If so, please share with me! I would be more than happy to learn more about perpetuum mobile machines in business.
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