Joi Ito wrote an interesting article about the difference about the “traditional sales model” and the “venture investing models”. His view is mostly from the side of invensting and the production risks overall.



He wrote:

Normal sales oriented companies and organizations have sales that grows month on month if the organization is doing well. While there is a tremendous amount of energy spent on increasing sales, typically sales are capped by some reasonable growth rate over time.

On the other hand, the downside of a company is nearly unlimited. Projects can cost nearly an infinite amount of money if mismanaged and there are a myriad of risks that can cost an operating company tons of money.

The larger and more established the company, the more the organization, as a whole seems to be focused on mitigating risk and minimizing costs as a way to increase earnings and protect itself.

Venture investing, on the other hand, is typically a fund or an individual with relatively limited downside. The most that you’re going to lose is the money you’ve invested and your time.

You can see two things from there: The web confronts us with a complete new way logic of thinking businesses. Although every exponential growth make me very sceptical, you will also see, that there seems to be a “break-even” in the venture investing model. In opposition to this, the traditional sales model gives us constant feedback on good work. The venture model won’t. It could be wise to keep that in mind.

Research and Theory - Date published: September 23, 2009 | 0 Comments

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