What is Currency?
In 100 Steps 2 Startup™, the concept of currency is a fundamental part of Phase 2, particularly step 11. The term currency refers to what a startup gets in the exchange of value with the customer or user. Currency can be money from the sale of an item, a signup on a social media site, content for a feed or whatever you expect from the customer in exchange for your product. For Facebook, Advertisers pay Facebook money to put ads in front of Facebook users. The currency in that transaction is dollars for access. But there is also a second transaction fundamental to the first. Users pay for Facebook services (e.g. storing pictures, posting messages, reading up on friends’ activities, etc.) with their attention, their eye balls, their time. The currency in this transaction is Attention for User of Facebook. The more one uses Facebook, the more attention they contribute and the more Facebook prospers.
In the legal world, Currency is referred by its’ historic name, consideration. Consideration in contract law is simply the exchange of one thing of value for another. It is one of the six elements that must be present for a contract to be enforceable. Different types of business / revenue models leverage different forms of consideration and therefore use different forms of Currency. For the most part Currency takes one of the following forms: money, experience, data, service, product, exposure, attention.
Can you think of several startups that use different forms of currency to fuel their business models?
Below are logos of famous companies, each representing a different business model. For each company, consider what the “currency” is? Ask yourself what the value being transferred is? And see if you can name the business model.
For the answers we turn to Mark Johnson’s Seizing the White Space: http://www.game-changer.net/wp-content/uploads/2015/01/list-of-business-models.png
Whether you call it consideration or currency, whether your model relies on money or attention being traded for your solution, you need to find a model that works and that will allow you to both scale the venture and remain sustainable throughout. If you don’t, you will either end up with a great small business (not scalable) or you will end up losing more money by growing (not sustainable). So give currency your consideration as you progress in building your awesome venture.
You can learn more about this issue in Phase 2, Step 11 of the 100 Steps 2 Startup™.