Analysis of a Business Model

A friend of mine from college emailed me today with an update on the business he started six years ago. The idea, which I’m not going to reveal because it is so easy to duplicate, is brilliant. This year he’ll generate $5 million in revenue with Google-like net margins, and he bootstrapped the whole thing. And, yes, he even worked a day job for the first four years of the business.

Here are some general ideas behind his business:

• Language-related service for people where English isn’t their first language
• All work is done by highly educated native English speakers in the U.S.
• Ordering is purely an e-commerce transaction on his site
• Everything is done through contractors with a strong quality control focus
• Contractors are on demand and don’t do work unless it has a corresponding contract associated with it

I’ll be the first to admit that when I heard about the idea, I had no idea if there was a need in the market. Even better, I didn’t think the market was very big. Wow, was I wrong.

This is another great example of how ideas look brilliant once they’ve been successfully executed. Most ideas are just that — ideas. The execution makes all the difference.