What Is A Many To Many Business? (And How Can This Model Produce Billion Dollar Outcomes)

By Yaro Starak
71 Comments

During the dot com boom around the year 2000, and the years that followed it (this was before I started blogging in 2004), I was a guy in his early twenties looking for a business idea to make my riches with online.

At that stage I had only built a few handful of websites, hobby sites that shared content about subjects I liked.

With all the buzz of the Internet at the time, I was motivated to do something more, to build something bigger.

To fuel this motivation I read a lot of books about how the most famous companies at the time got their start, including Paypal, Google, Napster, Starbucks, and eBay.

For me, the eBay story, related in the book The Perfect Story by Adam Cohen was one of the most exciting, because the idea was so simple.

EBay grew incredibly quickly. The success was surprising considering why it was created in the first place. It started out as the coding work of Pierre Omidyar, looking to help his girlfriend out, and was certainly not intended to become a billion dollar business one day. I’ll let you read the book to hear the full story.

What I really found especially eye-opening about eBay, was how much I loved the business model.

onetomanytomany

EBay allows people to sell and buy goods at auction. Both the supply and demand side of the equation are provided by customers of eBay. EBay did not have to handle inventory or delivery, just provide a platform for people to connect.

Obviously until you have sellers you don’t have products you can offer, hence you won’t have buyers either. As with what happened to eBay, if you can cement a leadership position in your market, what used to be a challenge becomes the best barrier to entry you can ever hope for.

The Problem With “One”

I studied a lot of business models during this time, and implemented a few with different business ideas.

For example, I used to run a web hosting and design service because I learned how to manage a server and write HTML. It made sense to start this business because my skills were in demand, especially back then, since everybody was just getting their first websites up and running.

The problem with this business was that I was just one person, trying to build websites for clients, setting up their server accounts, doing customer support and sales, etc. I had all the usual issues of a solo-operated contractor services type business.

My content hobby sites were a bit easier to operate because I didn’t have to deal with customers, but it still largely relied on me for value creation. If I didn’t build the websites, update them and go out there and market my work, the audience didn’t show up. There was no strong mechanism to attract traffic besides my own grunt work.

I read about how other people made money online. I noticed that groups like freelancers, consultants and any person who had clients or created value by themselves, struggled to make significant money. They always complained on blogs and in forums about their annoying clients and customers and the long hours they put in, for the average salary-level incomes they took home.

One of the other challenges with the freelance/consultant model is growth. It is possible to scale such a business if you bring in talented people to do what you do, but that is a very big task, one difficult to manage while you are also delivering the core service your business provides.

My conclusion was that a business based on one person’s skills, which are delivered in a per hour or per contract basis, is a lot like having a job, except you are the boss. Unfortunately you lose many benefits of employment, like sick leave, holiday pay, health cover, set hours, and usually end up working even harder for yourself, including weekends.

I decided I wanted to avoid the one-to-one business model, or even the one-to-many business model if possible. I didn’t want to be the “one” servicing people.

What Is The Many-To-Many Business Model?

The Many-To-Many model is very simple. You have many customers and many suppliers and link them together as a middle platform.

They say being a middleman is good. With an online business it can be very good, because your technology is the “middleman”, and the potential for scale is global.

In most of these models, the platform provider takes a fee from the transaction they help facilitate. Ebay, AirBNB and Kickstarter all do this, and make millions from it.

Google’s search engine does it too, but in a slightly disconnected way. They use AdWords to charge a fee from the many advertisers who want to pay to reach the many people searching.

Google’s AdSense for publishers system is another good example. They connect all those AdWords advertisers with web publishers, using their ad delivery platform, and take a cut from every click on an ad.

It’s a simple concept, but incredibly lucrative when you tap into large markets online, especially when you are the market leader.

Why Market Leadership Is Critical

Although perhaps a little dated when you read some of the examples and industries written about, many of the principles in the 22 Immutable Laws Of Marketing by Al Ries and Jack Trout are still sound.

Law 1, the Law of Leadership, talks about how being first is a powerful positioning statement in the minds of consumers. When you are first, you define a product category, and it’s very hard to lose that position.

Law 7, the Law of the Ladder, talks about marketing based on what position in the market your business or product is in.

The authors explain that products which are number one, usually at minimum outsell number two by more than double. Products in position one and two sell more than the rest of the entire market combined.

The conclusion: if you are first and maintain leadership in a market you do very well.

This principle has never been more prevalent than in many-to-many business models.

The first to capture a market that is driven by a many-to-many business model, will very likely rise to become the leader, a leader much bigger than anyone else in that market.

This is often due to the barriers and advantages created by what are called Network Effects.

In economics and business, a network effect (also called network externality or demand-side economies of scale) is the effect that one user of a good or service has on the value of that product to other people. When network effect is present, the value of a product or service is dependent on the number of others using it. – Wikipedia

The sites with the most users attract the most users, making those sites more valuable. It’s a positive feedback loop.

It is very very hard to take market share from leaders in these situations because why would a customer want to go with a provider who doesn’t have the inventory?

Of course there are exceptions to the rule and sometimes a better executed idea can erode a leadership position (MySpace losing to Facebook for example), but in most cases the leader wins and keeps winning thanks to network effects.

Does It Always Work?

For the Many-to-Many model to work you still need business fundamentals to be in place.

To put it simply, you must have an in-demand product or service and the ability to reach people who want it.

The tricky thing with building online many-to-many businesses, is that your customers don’t always make it obvious they want what you have to offer before you create it.

In all cases a successful business will tap into a core human desire – material possessions, travel experiences, social connection – but they would not have thought of an eBay, AirBNB or Facebook to meet these needs until clever entrepreneurs made them available.

This is why you need a mix of innovation, business and marketing skill and a willingness to experiment with unproven concepts, to create a true, market leading new business.

The book, Blue Ocean Strategy, offers a framework for creating what the authors call “Blue Oceans”, otherwise known as uncontested markets.

A “Red Ocean” is bloody from competition for marketshare by several companies who are vying for the same customers. For one company to increase marketshare, another has to lose it.

A Blue Ocean is the creation of markets clear of competition – a way to lead a market by creating one.

If you combine this principle with a many-to-many business model, you have the formula for a very lucrative result.

Easier said than done of course, but knowing a strategy for what you want is a good first step.

My Own Attempts At Many-To-Many Businesses

My greatest success online in terms of financial return, is blogging and teaching, which is not many-to-many.

My blogging and training business is one-to-many. I am the content producer, and many people enjoy and pay for my work.

I do a good job of extracting high value from this model using limited resources, mainly because it taps into a skill I have that I enjoy using (content creation). I leverage my work in a very efficient one-to-many model. There’s only one me however, and it’s hard to scale Yaros without some pretty good cloning technology.

My first real online business, BetterEdit, was a true many-to-many business, offering editing services to many students provided by many editors. My business was the middleman. The technology platform was very simple, just a website that explained the service and an email distribution platform to connect editors and students.

It wasn’t a pure many-to-many business however because my company represented the editors. To make it pure many-to-many, I would have to let the editors and the students meet and arrange the details between themselves, and then take a cut of the transaction. Basically an Elance type service niched down to just editing and proofreading.

The benefits of many-to-many were there however – the ability to scale on either side of the relationship to as big as demand could get, without my own workload increasing dramatically.

The business succeeded, and happily generated over a $100,000 a year in sales during the peak time I owned it, however I never put in the necessary marketing steps to go much further.

I knew there was a very large market still to be tapped (and still is), but I didn’t have a way to reach them all around the world effectively. I decided to sell the business rather than continue to work on growing it.

More recently I have worked on CrankyAds, an ad network that connects website owners with advertisers, using our custom built ad serving technology.

This is another many-to-many business model, as we can service many publishers and have many advertisers buy ads from them. We then take a slice of the transaction to generate revenue.

The business has succeeded to attract a small and loyal user base and ads are being transacted every month. It makes money, but barely enough to cover costs at this stage.

The problem is that development has taken many more hours than initially considered. I had big plans for cool features that would set us apart, but we have struggled to develop the version one basic set of features.

Because of this we don’t have a platform that dazzles, and hence it grows slowly. It’s functional and simple, but not all that different from the rest of the competition.

We are a small player in a red ocean, where I originally planned to create a blue ocean using clever technology. The technology has proven too resource intensive to create (my hats off to all the software companies out there – you work miracles!).

Both my many-to-many attempts so far have worked, but they have never truly scaled big, so have not taken advantage of what many-to-many is really about – massive leverage through network effect.

Of course that does’t mean I won’t keep trying. I suspect my next startup will also be a many-to-many business, and I will leverage what I have learned from my experiences so far.

What About You?

Now that you know what many-to-many is, why it’s superior to other models and how it can lead to billion dollar businesses, you can contemplate your own ideas.

To help everyone think more about many-to-many, please leave a comment telling us what is your favourite many-to-many business.

Yaro Starak
One-To-Many

About Yaro Starak

Yaro Starak is the author of the Blog Profits Blueprint, a report you can download instantly to learn how to make $10,000 a month, from only blogging 2 hours per day. You can find Yaro on Facebook, Twitter and .

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71 Comments

  • Hi Yaro,
    I am also the entry for this kind of effort via blogging. Just beginner step have done. I try to follow your contents step by step for develop my site.

    • Jake

      In the early 2000s, I (unknowingly) created a many-to-many business bringing together law firms looking to hire with lawyers looking to work and cutting out expensive middlemen. At its height, the business had about 300 law firms signed up and 25K+ lawyers in our database and was making over $1m per annum – such is the power of M-to-M However, there are drawbacks:

      1. Creating a M-to-M software platform is expensive. It’s expensive to build and to maintain/improve/automate. It’s also time-intensive. I coded the site myself, 18 hours a day, 6 or 7 days a week – and we did not really see serious money coming in until the fourth year.

      2. Don’t underestimate the sales and marketing costs of promoting the service to would-be customers. We had to hire good sales people to ensure we reached capacity. Our sales and marketing bill was about 20% of our monthly revenue.

      3. IMO, whilst a one-to-many business doesn’t scale as well, they are easier to start (both in terms of time and money) and you will see results sooner. You can also create more of them.

      Thanks for the honest assessment of your own efforts, Yaro. M-to-M is brilliant when it works but like everything worth having, it takes hard work.

      • Great points Jake, and thanks for sharing your own story.

        You are right, platform building can be a huge cost, that being said you can start off small and use a human as the platform, like I did with BetterEdit. Email was the platform and I had an assistant control all the work between the editors and proofreaders. Obviously just one human can’t scale too big, but it was more than enough for a small business.

        Yaro

  • What’s up Yaro,

    I like the metaphor.

    Ultimately I think the best M2M business is a blog.

    With all things considered you have on one side many bloggers looking to connect with many readers.

    As the owner of the blog you benefit from arranging and allowing the sharing of ideas.

    The more interconnected the more profitable.

    Fizzle is a good example of scaling this model without increasing work load.

    • Hey Darnell, yes you are right a blogging platform like tumblr is a many to many business, but a blog created by one person is not. You need to have low friction scale on both sides of the many relationship, and I don’t think a single blog is ever going to want to have 10,000 authors writing for it.

  • Tim Allix

    I am experimenting with Amazon FBA. I don’t know if you would consider this a M2M business, but I am excited about its possibilities.

    • Becky

      Yes, the Amazon FBA model shows tremendous potential. I’m on a course right now to get into the physical product (not Kindle) game. You have massive leverage, infinite scale and can set up a system, then market it, and then be able to step away from it, to let it run on its own momentum and then sell it on…Really this is my next step in mm online once I’ve completed my final ebook project. Ebooks btw, were my eyeopener to the power of Amazon and have got me to well over 4 figures in just 8 weeks. I then repeated that and got the same result with ebook 2, although sales do tail off post 12 weeks. Mind you, you need a platform to launch ebooks – after 3 years struggle with little pay, my Facebook and blogging platform (constant relationship building) ‘word of mouth’ than SEO, actually paid off big time (thanks Yaro!). The only snag is ebooks DO require time to write if you want evergreen quality content “bestsellers” that are cash-cows. So I planned to write 3…two have turned into best sellers and the final one is out in July. However, the big curious question is, what if I could increase my margins x 10 and get in front of the same people (millions of them) but work from your laptop only anywhere in the world (my goal)…the only way to do that is via physical products via a big platform where you don’t touch inventory. You can do it via info products too…but you don’t have the leverage to launch and takes huge time to produce, plus up against the whim of Google and SEO and yes, you have to ‘show up’ continually to grow etc..I want to ‘step away’ and run something not be the strongest link. For me, time to move on from blogging…(at least it will remain a hobby site I can pursue in my free time when I AM successful!)…great post Yaro..you got me started online and I won’t give up until my financial goals are reached!

      • Becky, you’ve taken a path I’ve often considered. I love writing, but constantly talk myself out of directing attention to ebooks. What do you recommend for preparing to write a first ebook? I have the ideas and content creation, I’m just lacking a starting point. Any thoughts will be much appreciated.

    • Tim – I don’t see using Amazon fulfilment as a M2M platform. Amazon itself is the M2M in the FBA program, but if you use FBA to sell your own goods, that’s a one-to-many relationship since you are one supplier serving many customers, who happens to use Amazon for distribution and handling.

      Yaro

  • Hi Yaro,

    First time I have heard the term M2M but definitely not the first time I have thought about this concept. I think one of the most powerful things about the internet is how it can not only create new marketplaces, but make existing marketplaces more efficient. There is still a lot of room to disrupt existing markets by creating online platforms to service them.

    Once the platform is created, however, how do you get people to change their habits to use it? Reaching that critical mass that new users outnumber the natural churn seems to be the key.

    • So true Robert, critical mass is, well, critical. I agree that a new M2M platform is a great way to disrupt existing industries.

      One place I’d like to see disruption done better is in real estate. I think house buyers and house sellers could be connected more directly, rather than the heavy dominance by agencies. Perhaps though the agents are still need due to the unknown variables where expertise is required – like pricing for example.

      Yaro

  • Hi Yaro,

    Nice meeting you last night.
    M to M… I guess all the big mega chain stores from the supermarkets to department stores are M to M’s. Woolworths, Coles, Target and Walmart don’t produce their products, they have thousands of suppliers send them products which they sell with a margin put on top.
    All these “big boys” have great physical reach (locations) so us consumers can find them anywhere.

    Amazon do the same with thousands of authors and book publishers supplying books and every sort of product – utilizing new technology – the web.

    Youtube is a “classic” M to M using a digital platform.

    M to M… thanks for the insight.

    Other topic
    I recon a blog post on your Business Strategy and where you are going and where you have come from would be informative (a classic entrepreneurs-journey!).
    For example: years ago you successfully sold hundreds of thousands of dollars worth of membership courses. You then went the “magazine model” utilizing many different authors, whilst I believe, you had more of a personal focus on your start-up.
    You now seem to be structuring your blog and revenue streams back towards were you were 3 or 4 years back.
    I would be interested to get your thoughts or a post on your entrepreneurial journey over the last few years and what direction you are going on now.

    Cheers

    Anthony

    • Anthony – yes you are right, the grocery stores are M2M as well, though they have issues with scale due to the physicality of what they sell. Amazon goes digital and thus can make available a whole more more, YouTube goes completely digital and thus has almost no friction on the supply and demand side, beyond the challenges of technology.

      Regarding your request for an update to my own journey, you must have read my mind! I have it on my article to-write list to update my business timeline series, which is now three years out of date.

      http://www.entrepreneurs-journey.com/yaro-starak-timeline/

      Look for an update to it soon!

      Yaro

  • Great concepts here. I am listening to the podcast between you and Timothy Ferris. Very interesting that’s for sure!

  • Rick Resch

    Hey Yaro,
    Thank you for the book recommendations. I’m always interested in what you read and I placed them on my list for future reading. I can’t keep up with everything I want to read, so I try to read the best of the best and the people I respect that know more than me. I really like this post and I’m amazed by this concept of many to many. I’m trying to figure out how I can use this business model in my ideas for my next company. I’m always trying to learn more and devour as much information as possible. It’s like drinking from a fire hose. There is so much good stuff. Thank you!

    Cheers,
    Rick

  • AMAZING ARTICLE!! I never comment on blogs..BUT this one was so amazing, that I couldnt stop myself from commenting!! Really Amazing research Mr. Yaro!!!!
    (There’s one more example of B-B, its Flippa.com :))

    • Yep, Flippa is a pretty good M2M business too, so are all online forums that charge money for a transaction where the value is created by the userbase.

  • thanks for your insights especially those on cranky ads (maybe nomen est nomen :-))

    i think the m2m model is too stressful. because it is not depending on you it is exchangable and many others can and will do the same.

    • That’s a good point – it can be very stressful to manage as it grows given you have so many people involved. That being said, all businesses have stressful things.

  • Hi Yaro.

    Very interesting what you say, the M2M model is perfect, but of course it costs to have market share.

    M2M Amazon would be another model, right?

    Good luck in your future business.

    Greetings from Spain.

    • Yep, Amazon is a many to many when it connects other sellers with buyers. All retailers really are M2M if they connect wholesalers and manufacturers with buyers, although Amazing is a good example because it can scale very well thanks to it’s efficient distribution model for carrying product and online selling model for reaching customers.

  • Viv

    Very interesting and insightful post… thanks a lot. Mark Zuckerberg referred many to many models as platforms, which is exactly what you explained. In my opinion, these platforms are the really scalable business model.

  • Rex

    Hi Yaro. I hope you are doing well. I haven’t followed you much yet but i really like your basic integrity. I am a newcomer blogger and desiring to put my life experiences out there, especially in the field of addiction, to be of benefit to others. I believe I shall learn much from you. Thanks and all the best. Rex

  • Yaro

    Id be interested in reading more about the startup phase of the M2M business model.

    Like any model, if we dont survive the startup there will be no business.

    So, what are the pitfalls to look out for? I

    eg Is it launch small, make a lot of noise and create interest or fly under the radar and build quietly?

    etc. etc.

    Cheers

    Rosemary

    • Hi Rosemary, I think M2M is like any startup with the same challenges of marketing and delivery of a product.

      Perhaps with M2M it’s even more critical because without users you don’t really have a product.

      The best advice is to start small and lean and test basic assumptions about your audience before investing too much. Be quick and build a userbase and then work on what they want as they user your product.

  • Venkatesh Iyer

    I get the feeling almost all of the great many-to-many business examples, such as those named in this post, were successful almost by accident: the original intention behind the business was not what it finally landed up becoming.

    • That’s a pretty likely scenario Venkatesh, especially because most of the companies evolve from startup to large corporation adjusting on the fly to what customers want. It never looks like what you expected it to.

  • Great post Yaro, this business model is something that is so obvious but yet so few people took the advantage.

    And it’s true that first one to start is going to win but again we are all extensions of people and technolgies that came before us.

    Many of those are not first like you mentioned, Google is the best many to many but he’s not first, facebook is also not first, but like you said they learnes how to scale and improve the product, which sometimes is more important than getting there first.

    My favorite many to many model is youtube, a perfect platform to monetize and just provide te people with tools and website.

    Thanks for sharing and have a great day Yaro :)

  • Yaro, this is super timely for me as I have been planning a site and really didn’t have all the pieces to make it happen. You added clarity for me. Thanks so much.

  • Yaro–
    Do you think there is any potential in the M2M biz model for art/craft-oriented businesses?

    • Sure, connecting people who have new designs with people who follow the designs, that’s something off the top of my head.

      There are no doubt many options – just think about what aspect of arts/crafts people want or go looking for online every day and see if you can connect the dots.

  • Rakia R.

    I love Google as a M2M! My husband and I are the kind of people who love to read and learn new things. We’ve learned that having a cellphone in the palm of your hands and Google search equals instant knowledge. If there is ANYTHING that we’re interested in and need to know an answer we’re very likely to “Google it”!

  • Thanks for the excellent article, Yaro. The business I’m doing the most to develop now is M2M, which I understood only intuitively when I began it. The site enables men to find platonic male friends and is called seekBromance.com. Mechanically, it works like a dating site, although technically it isn’t one. It’s already picked up some great media coverage.

    Cheers,
    Dave

    • Interesting idea Dave, although I don’t know if I would use a site specifically to find male friends.

      I’m more likely to use a site like meetup to find events that I am already interested and then make friends from there, since I know we have common interests, plus there is less pressure.

      That’s one of the main problems with online dating – it’s not natural, so anything you can do to make things more natural and less contrived, the better.

  • Ross

    Most people in their life can either sell their time or a product.

    One-to-many selling a product especially digital format is so much better than trying to sell your time to all those people.
    Scaleablity is a big factor too. Ebooks are especially easy to sell more off compared to selling something physical like a skateboard.
    Like your membership courses you were selling mostly a digital product. With the same production cost, if one or ten thousands people brought it. Correct?

    Just something Yaro I feel needed to be added.

    So Yaro if you don’t mind me asking, since you brought up the subject, how are you paying the bills these days?

    • Hi Ross,

      When I sell digital products it’s a one-to-many model. If I was a platform like Clickbank, where many producers of digital products sell to many buyers, that would be many to many.

      I’m currently paying my bills with a combination of some affiliate income that is residual from years ago, a tiny bit of ad revenue (although I am pulling external ads off my site for the moment, which you can probably tell) and money from investments.

      I’m in the process of launching new products, all of which I will talk about on EJ as it happens. I’ll explain my strategy as well as it rolls out. Needless to say, it is a transition period for me.

  • I have thought in the same angle earlier. But here’s how I put it…

    The most profitable business model is to HAVE A PLATFORM where you can reach an audience at little or no cost. Once you have that platform, people will pay you to access that audience.

    Email List, Websites like forums, blogs and so on are just platforms.

    Your concept of one and many is interesting:

    1 to 1: Job, Consultancy and so on (Employed or self employed as Rich Dad, Poor dad put it)

    1 to Many: Businesses which provide a product or service to many and scale it efficiently. (Even Apple and Microsoft does that so it can be profitable as well).

    Many to Many: Own a platform where you have a large following/audience/tribe access. One can deliver value themselves to the audience or let other people access that audience.

    • You got it Deepak!

      One important point is how powerful owning the platform is against competition. That’s a key advantage of M2M, the challenge of network effect building.

      • I am really enjoying this conversation and think it is your best blog post ever Yaro – love the honesty and the professionalism combined. Please explain your comment ” how powerful owning the platform is against competition.” as not sure what you mean?? Thanks so much.
        (“The power to question is the basis of all human progress.”
        Indira Gandhi)

        • Owning the platform means people are forced to go with you because people already go with you.

          Think about trying to start up an ebay competitor. It’s very hard to make it work since no one wants to list with a site that doesn’t ahve audience, and an audience won’t show up if you don’t have listings. Once you have critical mass, you have to screw things up pretty bad to lose your leadership position, unless someone comes up with a better version of what you offer.

  • The truth is, blue ocean does not stay blue for long.

    • True. But there is a huge advantage to being 1st – first-mover advantage. Competitors will have a harder time competing with someone who already dominates the niche.

      • And a blue ocean combined with M2M is a powerful position. Do you know of any serious competitors to eBay? Google? Facebook?

  • JC

    Hi Yaro,

    I don’t think M2M is that good of a business model compared to one to many. There could be a lot of quality related issues with M2M, take eBay for example.

    I think the problem with CrankyAds is that it is probably not differentiated enough from say, Google ad network or BuySell Ads. So, it is not the problem of whether M2M is better, or one to many is better. It is about the quality of the software service and the market too.

    For me, I would think undertaking M2M is a huge endeavor, so I’d avoid that. Also you have to be comfortable with M2M in order to make it work. For me, I can’t stand low quality, even though I tried to make my site a forum, but I didn’t succeed. Rather, I find success these days, with me providing content and other editors providing content. Also me writing code to add features to the site, like a better onsite search engine, etc.

    So the bottom line is, it is best to stick with what you are good at and comfortable with, rather than chasing a big market where you are not sure about.

    • Hey JC,

      I think M2M is a better model than one to many, only because of the potential for scale. It’s easier to get very big when both sides can grow together. That’s not saying one to many can’t get super big, Apple you could say is a one to many company for hardware, but I just like being the place to go to rather than the supplier.

      I agree with what you said about CrankyAds – as I noted in my article, I wanted to create a blue ocean, but I haven’t had the technical capabilities to make it happen nor do I want to invest in what I can see now will be too much time and money to make it happen. Unfortunately that leaves CrankyAds in a red ocean of competition, like you said competing with Google and BuySellAds too directly.

      • What will you do with CrankyAds? Just asking as I have a few ventures I am leaving by the wayside and feel a bit torn about.

        • Ideally sell it to someone who has development capabilities to keep it growing.

  • Rosemary Breen

    Wish me luck…I am building a platform – literally – a digital magazine publishing platform.

    Hopefully it will be blue ocean for me :)

    Cheers

    Rosemary

    • Good luck!

    • Rosemary GOOD LUCK, great work and please keep us posted.

      • Rosemary Breen

        Lesley and Yaro

        Thanks for your words of advice and encouragement. This is certainly the biggie for me.

        Ciao
        Rosemary

  • FJ

    Hi Yaro,

    Other M2M businesses: Fiverr, Kindle/Nook/iBooks, ClickBank

    What’s interesting about airbnb is that there are plenty of sites that exist that are like airbnb (vacation rental by owner sites), and they were around before airbnb, but the guys behind airbnb had the skills/money/support to plow through the rubble of uncharted territory to grab the #1 spot in people’s minds. The trick is to race to the top once you’ve launched (before somebody else just as skilled or well-funded gets there before you) and that takes skill and lots of money. Having partners and investors is always good for this kind of model. There’s an interesting article on the founder of airbnb in Fortune magazine. He talks about some of these challenges. You should check it out.

    No doubt, however, if you can win at the M2M game, there’s potentially billions waiting on the other side!

    Thanks for sharing your thoughts on this :-)

    FJ

  • Matthias

    Hi Yaro,

    thanks so much for sharing all this know-how with us!

    I’d like to pick your brain on this question:

    Do you think a many-to-many approach AND selling your own products, both together can work? For example, a membership site selling digital products, and a forum community, together?

    How would you prevent the many-to-many aspect, e.g. forum, from being used as a channel through which members can share the information directly with each other that actually you are trying to sell to them individually yourself?

    In simpler terms: Would the first people that learn from you directly multpily the learned know-how and skills through the forums, making it unnecessary for others to use any of your paid products?

    Of course, you can put in technical restrictions, such as limiting in what ways they can communicate with each other, blocking contact data and similar measures; but that would be detrimental to the many-to-many aspect.

    So: Are selling products on a membership site and a many-to-many approach exlusiding each other?

    Reason I am asking is that I see the great potential in many-to-many, but I also see huge benefits in a one-to-many membership site.

    All the best!

    Matthias

    • Hi Matthias,

      If you are only selling your own products to members then it’s a one-to-may model.

      If you have a forum and you allow your members to sell products to each other and you take a slice of every transaction or earn money another way, then you have a many-to-many.

      Remember true M2M is when both sides scale. If you sell your own products there are only so many products you can make, maybe a few hundred at most. If it was M2M you could have thousands of people selling hundreds of thousands of products to thousands of over people – SCALE!

      Yaro

      • Matthias

        Hi Yaro,

        that was a very quick resonse, thanks heaps!

        My apologies, I have a slightly sleep deprived brain and may not have expressed myself very well; let me try to do better:

        There are two parts that I would like to combine:

        Part 1: I want to sell my own paid information products to members, focusing on teaching them specific know-how through e-books, how-to videos, webinars and more. Most of those will be pay-once-receive-once type products, so no real continuity in this part of the business.

        Part 2: In addition, I know that a forum would hugely benefit the community and increase the membership value for my members, through the direct exchange of their ideas and experiences, but also as a tool to find and meet each other (nothing to do with matchmaking in the classic sense). The forums will be a fundamental part of the continuity aspects of the business, via a monthly subscription.

        As an example, it’s as if I wanted to sell information products about, say, organic farming, and also offer the service of certifying farmers as one of my paid products; at the same time, I would be providing a forum for the organic farmers to communciate with each other and find and meet with others in their local area.

        In this example, the certifying part of course they can’t do for each other and will have to buy that from me; but the teaching they might help each other so much with that they won’t buy many products for that from me anymore.

        The problem I see coming is that a lot of what a few members learn through the paid products of part 1 will then be passed on from them to other members via the forums in part 2, who then won’t need to buy any of the products offered in part 1.

        The problem is that while I would like every member to buy their own information products from me, I am so keen on providing the forums exactly because I want them to be able to talk with each other and benefit form each other’s experiences in the topic of the business.

        I guess the question is: Do you think if members can freely communicate with each other through my forums, there will still be enough who will buy my information products despite that? Of course, some elements of the paid products, such as videos, are not very easy to share with someone else you meet on the forums; but other elements certainly are, and of course people can always just tell each other about what they have learned.

        Am I worrying unnecessarily?

        Because of course, buyers of paid products talking in the forums about what they learned through those products can also be seen as great advertisement to others to buy them themselves – for the reason that no one can pass on the large amount of information in the easily digestible way I have packaged it in those products. It is not like I have “one single big simple secret” that anyone can convey to anyone in three sentences, so it’s not really that easy to “leak”.

        Maybe the answer lies in what products and services I bundle together in each specific offer; I feel that this could be a major influence on someone’s decision whether to buy the paid product / offer, or try and scrape together or extract all the know-how and information through asking around in the forums etc.

        Really appreciate you taking the time to reply to our questions in your blog, Yaro. Fantastic work, as usual (no pressure, haha!)

        Have a nice day over there, greetings from New Zealand!

        Matthias

        • Hi Matthias, I wouldn’t worry at all about what you are talking about in this comment.

          The real challenge is getting people to actually participate in a forum. That’s what you should concentrate your energy on, not whether the forum will make your products obsolete, because it won’t. It will very likely be a ghost town and it will take a long time and lots of promotion to get it active and keep it active.

          Yaro

  • Matthias

    On a side note: How would you classify a forum that is not for selling stuff from member to member?

    With the members, the customer’ side scales. But since I am the seller, selling the monthly forum membership; and in the foreseeable future, I’m not going to be more than one person, so I don’t scale very well. Yet, I’m not the one providing most of the “product” – the members are, via their contributions.

    This may be an academic question, but sometimes it is helpful to be clear on definitions.

    Cheers,

    Matthias

  • Matthias

    Ok, condensed the answer down to:

    1. Create products that are so well made and compelling people will want to buy them instead of trying to gather the information from other places

    2. Create compelling offers by carefully choosing which products to bundle together

    3. See “leaked” bits of information via the forums as advertising

    4. Live with a few “losses” that may occur

    Do you think that’s solid enough to handle the problem?

    Cheers,

    Matthias

    • That sounds about right – although as I wrote above, getting a forum going is harder than anything else I have done online – it’s even harder than a blog in my opinion as you rely on many people to contribute content.

  • Matthias

    Hi again Yaro,

    yes, you are absolutely right about getting a forum going being hard, I have some experience with that and several other cans of worms a forum often opens.

    On the other hand, in my experience a forum can work particularly well wherever the people involved also have an interest in getting together in “real” life. If people know each other face to face, even if only in little local “clusters” that are scattered all over the world, or even just anticipate meeting face to face eventually, that installs a lot of “social control” and helps enormously to keep communication civil, and it also motivates them to contribute quality content and keep involved actively.

    An online community that is the expression and communication tool of a real world community can be very strong, and also much easier to manage than one where people never meet face to face.

    The people in this case have a specific reason to want to use a forum: One main reason why they are coming to my website is because they want to locate each other in order to learn together and from each other because they already know others like them are out there somewhere, but not where; and they want to meet both online and offline. The forum can help them with both.

    The business doesn’t rely on the forum in any way though; if it doesn’t take off, it will work just as well without it. I just feel that my customers will likely want a forum very quickly, and I want to get my strategy right from the start so that if or when they ask, I can provide that for them without the forum then messing with other parts of the business.

    But that is likely not going to be a problem, thanks for helping me see this clearer.

    We’ll see how it goes!

    Cheers,

    Matthias

  • Well I thought Id said all I was going to say here but have just coem across this article which is of interest.

    http://abovethecrowd.com/2013/04/18/a-rake-too-far-optimal-platformpricing-strategy/

    Cheers

    Rosemary Breen

  • I have a good example of this model but on a smaller scale. Fiverr.com. I remember clearly when they were not the market leader. They were not truly a huge business until they killed their competition.

  • Andrew

    Hi Yaro,

    Thank you for your honesty in your M2M journey. It’s real because most people focus on the fantasy rags to riches stories from media and forget it takes a lot of resources, the right contacts and luck in customer demand.

    I worked in startups and corporates in eCommerce and there is a tremendous amount of behind the scenes éffort most people do not realise it needs. That’s why VCs hedge provides the significant financial backing, contacts and also hedge their bets.

    Yes, it’s vital to pursue the idea (s), awareness of the journey ahead goes a long way.

    Thanks for keeping it Real.
    Andrew
    PS: Good to see Katerina took you to Balmoral Beach. She’s great value.

  • Christele Canard

    Hi Yaro
    If you truly have a Blue Ocean strategy for Cranky Ads, have you considered either getting funding from a Venture Capitalist or getting a Government grant? There is a lot of money available in grants especially for software development and exporting. If you are interested in exploring either of these directions, let me know as I have a few good contacts, especially with getting grants
    Cheers
    Christele

    • Hi Christele,

      I believe I have some blue ocean ideas for the advertising industry that CrankyAds could be a test platform for and yes we have looked at getting funding (we actually qualified for an incubation program that had a grant attached, but we turned it down).

      I’m going to write about exactly how CrankyAds evolved and where we are now with it, so you will see the full progression as to why we have not sought funding since then.

      Thanks for your contribution!

      Yaro

  • [...] next business after that was chosen based purely on my desire to make more money and to pursue the many to many business model. This was my proofreading business, definitely not a subject I was interested [...]

  • Yaro,

    Yes, the many to many model is the holy grail.

    We are doing this in the B2B online collaboration space.

    Anything new cooking? Would like to meet online, if so.

    Best,
    Shawn Kalin
    Director – BoardRoom.me

  • […] I wasn’t passionate about the subject of my next project, an online proofreading service, but I was passionate about the business model it followed, the many-to-many model. […]

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