I recently read with great interest the cover story in January’s issue of Inc. magazine. The story is about a young man named Markus Frind out of Vancouver, British Columbia. The story describes how he was able to slay Goliath on the Internet in one of the largest categories of online services: Internet dating. And, he did so by charging zero money, nothing, not a cent.

Markus had formidable competition from the major players: Match.com, eHarmony and Chemistry.com. Not only were they already generating revenue, they had an “army” of employees … in some cases as many as 100 people.

What was so unique about Mr. Frind’s business development model? And, why was he able to get on the front cover of Inc. magazine? The whole online business model has changed radically from the days of big enterprise software companies. And, even from the more recent phenomenon of “Software As A Service” or SaaS.

In the enterprise software days, the model was to charge hefty software license fees, plus training, plus support, plus name your fee. By the time one was done with all of these fees, you’re now into the millions, if not hundreds of thousands of dollars. Then the SaaS model evolved. No more need for expensive software licenses, just pay us a monthly fee and all your troubles go away.

The new business development model has really come full circle to Gillette. Give away the razor to sell the blades … or HP for that matter … give away the printer to get the ink sales. Markus couldn’t figure out why people needed to pay money for a dating service. Why not give the service away for free? And, in so doing, drive significant traffic to his website.

And so he did. His site is so successful that he generates $180,000 a week in advertising sales or $10 million dollars a year. Why are companies so eager to advertise with Mr. Frind? One point six billion visitors every month come to his site every month … yes 1.6 Billion visitors … every month.

The new business development model that has evolved here is the strategic decision to give away a service in return for acquiring a loyal subscriber base. Not just any subscriber base, but a HUGE base that covers every demographic: age, sex, religion, etc.

This database is an advertisers’ dream! Every possible way to slice data is available for the advertiser to play with and tweak. So, Mr. Frind’s business development efforts really revolve around which advertisers to allow into his network.

Oh and by the way, did I mention how many employees he has? Three! Yes, 3. His site is so simple to navigate, no fancy graphics or flash animation. In fact, it reminds of a cross between Craigslist and Google. But, it works! And, it doesn’t take an army of people to manage. So, guess what? The other beautiful thing about his business model is that his net profit is 50%! What an enviable position to be in.

The new way of business, then, is how to drive a huge subscriber list. Once you get that list, determine the makeup of that list, their demographics, what sells, how to sell, test and tweak. Simply put, you don’t need huge venture capital anymore, nor do you need to develop complex software either.

If this model doesn’t excite you, I’ve got a bridge to sell you.

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Business development used to be one of those “Huh? What kind job is that?” jobs. Most people understand sales, marketing and finance. But, for some companies, business development is hard to quantify. There are companies which consider Alliances or partnerships as business development. Others consider business development as a group that raises venture or financing money. It’s also been described as a role for mergers and acquisition. And, in some cases, business development has also connoted a sales function.

It’s no wonder that many companies have a hard time quantifying business development results. My definition of business development includes aspects of art and science. In addition, it’s probably one of the most strategic functions within a company, large or small. If utilized correctly, business development can result in raising significant venture money and financing, build an ecosystem of partners who will increase your presence and drive sales to the “nth” degree.

I was privileged to have worked for Oracle back in the 90s. Those were heady days during which the enterprise software market boomed. Database companies competed for market share and application software companies grew by leaps and bounds. This was also the time that Alliances and partnerships were built to create an ecosystem around the core products. Oracle emerged the leader in its space due to a large part its incredibly strong Alliance program.

At Everypath business development was both a strategic and functional role. In the year 2000 with zero revenue, a cool mobile idea and only a handful of people, how does one raise money to further expansion? The answer was we built strategic alliances with companies such as Accenture, Sun, HP and others. Our premise was that the technology was integral to the businesses of each of the aforementioned companies. In addition, these companies would be able to develop product and service lines around mobility.

In this capacity at Everypath, my challenge was to figure out what the mobility “software stack” looked like. How could customers use our technology and what software, hardware and services company would complement our products. My team created the stack and complementary partners and was responsible for raising $20 million in venture funding and financing as a result of our effort. In addition, we had the most comprehensive partner ecosystem in the then young, but growing mobility space.

The above are just two examples of how business development was implemented in the past. The science of business development was to figure out which players to engage with and art was to create a convincing story for collaboration. Of course, there is a follow up to that phase, which is the science of following up on the execution of the partnership / alliance.

The new world of online marketing and profit systems has its own unique challenges and business development. It requires a much improved way of thinking about alliances, partnerships, employees, etc. In fact, it’s almost antithetical to how the business was thought of in the past. In this new world, less is more. To be continued …

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The Internet has really leveled the playing field for small and REALLY small companies. It has allowed a virtual world in which any company, large or small, can create a global corporation even with a payroll of one.

What did I just say … a global corporation of one? How is this possible? Several factors related to the Internet have converged to make this possible: 1) Internet speeds are fast enough to make collaboration on a worldwide basis as simple as being there “in person.” 2) a plethora of really good applications that facilitate collaboration abound 3) the concept of the “free agent”, i.e. people who work on a contract basis is not only accepted, but now common place and … guess what … many of the collaboration software are free.

All of these factors, along with a few others, have made virtual business development, in many cases, more efficient than having your own dedicated payroll. In fact, I run a virtual company that utilizes contractors from around the world. Website development is done in Costa Rica, graphics developed in Malaysia, articles written in India and the US and a virtual assistant or two in the Philippines.

One of the cool things about working with contractors is that you have no payroll or “fixed” overhead. The contractors are rated by other employers who have used them in the past, just like the eBay rating system. Before you engage / hire, you know whether the person is any good or not in the area for which you are hiring.

One of the tools that I use to develop my business include Yugma, a free collaboration service. The service allows me to share my desktop with any number of participants. The participants can share slides, presentations, and even write on a whiteboard as if they were there in person.

Another incredible tool that I use is called MagicJack. With my assistants in the Philippines, I need a way to call them and for them to make calls to me. Of course, there’s Yahoo IM or Skype to Skype, but what if they need the ability for to call someone’s landline or mobile in the US – anybody – or vice versa. Yes, you could buy Skype out credits or use Vonage, but the cost eventually becomes too expensive. MagicJack runs on VOIP, connects to your USB port and costs $39 for the 1st year and $19 per year thereafter … for UNLIMITED calling to and from the US. Yes, UNLIMITED.

Then, there are a number of great and, yes, FREE, file sharing services. Google Docs is one that we use on a daily basis. All of our PDFs, documentation and policies, training forms, linking structures, etc. are shared online. Anyone with access to these docs can collaborate, add and share their work … 24×7, secure and FREE! Did I say free?

I’ll share more of these great tools in future blogs. In the meantime, it’s a great time to be doing business development. Never in the history of our world could a one-man operation be a global company and compete so effectively.

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