/ Opening
Follow the Money A business does not make money because people use it, like it, or know its name. It makes money when a specific payer exchanges money for specific value.
HOW A BUSINESS MAKES MONEY
Who pays?For what? Then ask what the company must do—repeatedly and profitably—to earn that payment.
PERSON → PAYMENT → VALUE → REPEAT
TAKEAWAY A business model is a payment system, not a product description.
/ Vote
Who actually pays Spotify? Select every group that directly generates revenue for Spotify. Do not vote based on who uses the product.
Free listeners Premium subscribers Advertisers Artists Podcast creators Record labels App stores Brands sponsoring podcasts
TAKEAWAY The user, customer, beneficiary, and payer may be different people.
/ Reveal
One product. Multiple money systems. Spotify earns primarily from premium subscriptions and advertising. Free listeners create inventory and future conversion potential, but they do not directly pay.
SUBSCRIPTION Premium listener pays for access Recurring monthly revenue
ADVERTISING Advertiser pays for audience access Revenue tied to impressions, campaigns, or sponsorship
ECOSYSTEM Artists, labels, creators, app stores Partners, suppliers, beneficiaries, or cost participants—not automatically customers
TAKEAWAY “Who uses it?” and “Who pays?” are different questions.
/ The Model
The five questions behind every business model Use the same questions whether the company is a retailer, hospital, agency, app, law firm, or marketplace.
01 Payer Who sends money?
02 Value What do they believe they are buying?
03 Revenue event When and how does payment happen?
04 Delivery What must the company do and spend?
05 Repeatability Why does payment happen again?
TAKEAWAY If one of the five answers is vague, the model is not understood yet.
/ Examples
Same questions. Very different businesses. The mechanics change by category, but the diagnostic does not.
BUSINESS PAYER REVENUE EVENT WHAT MUST HOLD
Costco Member + shopper Annual fee + product sale Renewal value and purchasing volume
Uber Rider; sometimes advertiser/partner Completed trip fee Driver supply, demand, take rate
Hospital Insurer, patient, government Reimbursed service Authorization, coding, collections
Agency Client organization Retainer, project, commission, media fee Utilization, scope control, renewal
TAKEAWAY The same “customer” may create value, receive value, approve value, or pay for value.
/ Common Mistakes
Four ways teams misread a business model These statements can all be true while the economics remain weak.
01 “People love it.” Love is not a payment mechanism.
02 “Users are growing.” Users may be expensive, free, or unprofitable.
03 “Revenue is growing.” Costs may be growing faster.
04 “It can scale.” Scaling a weak transaction scales the weakness.
TAKEAWAY Demand, revenue, and viability are related—but they are not interchangeable.
/ Team Challenge
Perform a business-model autopsy Choose one business and explain the money without using a slogan.
SPOTIFY COSTCO UBER HOSPITAL LAW FIRM AGENCY
1. Who pays?
2. What are they buying?
3. When does payment occur?
4. What must the company do or spend?
5. Why would payment repeat?
TAKEAWAY Describe the transaction clearly enough that someone can see where it could fail.
/ Pressure Test
What must remain true for the model to survive? A business model is not complete until its dependencies are visible.
1. Who can stop paying—and what would cause them to stop?
2. Which cost grows with every new customer or transaction?
3. What part of the model depends on volume, trust, regulation, labor, or supply?
4. Is revenue one-time, recurring, or unpredictable?
TAKEAWAY A model is viable only when the payment can repeat without the cost or risk overwhelming it.
/ Example
One defensible Costco autopsy The answer is useful because it separates the shopper transaction from the membership engine.
PAYER Members pay annual fees and purchase products.
VALUE Access to trusted bulk pricing, assortment, and convenience.
REVENUE Recurring membership fee plus merchandise sales.
DELIVERY Source inventory, operate warehouses, manage labor and logistics.
REPEAT Savings and experience must justify renewal; volume must support low merchandise margins.
TAKEAWAY The model is not “sell products.” Membership economics change what Costco can charge and how it competes.
/ Close
Do you understand the business—or only recognize the brand? A clear business explanation should survive without its logo, mission statement, or product category.
WHO PAYS? Name the payer.
FOR WHAT? Name the value and revenue event.
WHY AGAIN? Name the condition that makes payment repeat.
TAKEAWAY If you cannot answer those three questions, keep following the money.