Delivery models and scaling business

From: alexhormozi
The question of “what should I sell?” is common among aspiring entrepreneurs, and the answer often involves understanding the fundamental categories of sellable items and the models for delivering them effectively and profitably [00:00:07].

What Can Be Sold?

There are seven core categories of things that can be sold, each available in both physical and digital formats, leading to 14 possible combinations [00:00:13]:

1. Products [00:00:34]
   • Physical: Water bottles [00:00:36]
   • Digital: PDFs [00:00:39]
2. Services [00:00:42] (stuff done for other people)
   • Physical: Massage, lawn mowing, car repair [00:00:47]
   • Digital: Ad agency creating ads or buying media [00:00:51]
3. Access [00:01:06]
   • Physical: Leasing a building [00:01:09]
   • Digital: Access to a digital content library, like Netflix [00:01:11]
4. Attention [00:01:16]
   • Physical: Billboards [00:01:21]
   • Digital: Selling eyeballs/audience attention on platforms like Facebook and Google [00:01:25]
5. Risk [00:01:32] (selling insurance)
   • Physical: Insuring a building or product guarantees [00:01:35]
   • Digital: Insuring against cyber threats; AppleCare as paid insurance [00:01:39]
6. Money [00:01:57]
   • Physical: US Dollars [00:02:07]
   • Digital: Cryptocurrencies [00:02:10]
7. Endorsement or Brand [00:02:15]
   • Physical: Licensing a logo for merchandise [00:02:17]
   • Digital: Selling a checkmark on Instagram, representing status [00:02:23]

It’s important to note that what is sold can be a combination of these categories. For example, a rock concert sells access to an experience, but also physical products like drinks and t-shirts, and potentially digital recordings later [00:02:35].

Choosing What to Sell

The choice of what to sell largely depends on two factors [00:02:50]:

1. Resources You Have: This includes financial capital (e.g., a $100 starting budget might preclude physical products or complex software) [00:03:50].
2. Your Skills, Value, and Experience: Even first-time entrepreneurs have experience through osmosis, such as knowledge gained from parents’ professions or past odd jobs [00:02:53].

The ideal starting point is often to identify which of the seven categories you have experience with and then determine the biggest problem you can solve within that area, given your resources [00:03:39]. For many new entrepreneurs, selling their time through services is the most common starting point [00:04:00]. The “sweet spot” is where you provide the most value to a person for the least amount of money to yourself [00:04:04].

The Delivery Cube: Enhancing Value and Profitability

Once an entrepreneur establishes what they will sell, the next step is to consider how to enhance, make more or less valuable, or more or less profitable [00:04:13]. The “Delivery Cube” offers six frames to increase the scale of a deliverable [00:00:27]:

1. Audience Size [00:04:21]

   • One-to-one: Personalized, high value (e.g., individual call review) [00:04:25]
   • Small group: Semi-private interactions (e.g., five people doing something together) [00:04:32]
   • One-to-many: Broadcast, lower perceived individual value but high scalability (e.g., webinar to 1,000 people) [00:04:27] Each option has distinct value propositions [00:04:28].

2. Level of Involvement [00:04:46]

   • Do-It-Yourself (DIY): Customer does all the work. Most scalable, typically lower value [00:04:48].
   • Done-With-You (DWI): Hand-holding through the process. Intermediate scale and value [00:04:50].
   • Done-For-You (DFY): Provider does all the work, delivers a final product/outcome. Least scalable but often most expensive and sometimes easiest to sell, though hardest to deliver [00:04:53].

3. Support Medium [00:05:15]

   • Email/Chat: More scalable, generally less valuable [00:05:19].
   • Phone Call/Zoom Call: Less scalable, significantly more valuable due to real-time interaction [00:05:23].

4. Consumption Format [00:05:40]

   • Visual, Audio, Text: Different sensory experiences for content consumption [00:05:41].
   • Live/In-Person: Perceived as most valuable but least scalable [00:05:53].
   • Recorded/Digital: Most scalable but usually least valuable [00:06:01].

5. Speed and Convenience [00:06:07]

   • Availability: 24 hours a day vs. 9 to 5, or 7 days a week vs. 5 days [00:06:12].
   • Response Time: Guaranteed 24-hour response vs. 3-minute response [00:06:21].
   • Efficiency Trade-off: Overstaffing for customer convenience (provider incurs inefficiency) vs. 100% staff utilization (customer incurs inefficiency by waiting) [00:06:34]. Both strategies can lead to successful companies [00:06:46].

6. The 10x to 1/10th Test [00:06:50]

   • 10x Price: If you charged 10 times more for your offering, what changes would make it worth that much? This encourages thinking about providing significantly more value [00:06:52].
   • 1/10th Price: If you could only charge one-tenth of the current price while maintaining or increasing value, what would you do differently to be perceived as valuable without incurring high costs? This fosters innovation in cost-effective value delivery [00:07:18].

This framework helps entrepreneurs determine an initial offering, how to scale it, make it more profitable, increase its value to the consumer, and understand the internal staffing required to facilitate growth [00:07:37].