November 28, 2011 Derek Sivers On The Co-op Business Model: Share Whatever You've Got
(UPDATED) I feel like I know almost nothing about business, because the only business I’ve ever done is the co-op / sharing model.
It goes like this:
1. You already have something that people want.
It might be something you own, something you’ve learned how to do, or access to valuable resources, space, or people.
2. Find a way to share it with everyone who needs it.
Share because it’s what you do for friends, because it’s the right thing to do, because it makes the world a better place, and because it’ll make you deeply happy.
Share as your contribution in return for all the things and ideas that people have shared with you.
(If you’re having a bad day, or someone has recently wronged you, you may not feel the world has shared much with you, but here’s a reminder.)
3. If it takes some effort for you to share it, you can charge a little something for your effort, to ensure that this giving can continue.
My examples:
- In 1994, the U.S. Copyright office still didn’t have their copyright forms online. You still had to mail a letter to Washington DC to ask them to mail you some blank forms, if you wanted to copyright your songs.
I scanned all the forms, and put them on my website for free as printable downloads, for any musician who needed them.
For the next year or two, until the government started putting the forms online, my site was the only place to get them. This was my first effort to contribute back to this great invention of the internet. - In 1995, I learned how to trademark my band name. It took many hours of work to figure out the legalese, but I did it.
I wrote out the step-by-step instructions and put them on my band’s website for free.
For years it was the go-to resource for musicians who wanted to trademark their name. - In 1996, I had a little record label, so I got a UPC barcode account, so I could put unique UPC barcodes on my CDs. I had to pay $750 to the Universal Code Council to get a company account, but that meant I was allowed to create 100,000 products under my account. Musician friends asked how, so I showed them how, but also said they could use one of my product IDs.
At first, I did this for free, as a favor, until friends started sending strangers my way. Because it took a little work to generate the number, create their EPS/TIFF graphic barcode, and keep track of their unique IDs forever, I charged $20.
Over the next 12 years, this made me almost $2 million. - In 1997, I got a credit card merchant account to sell my own CD at live shows. It cost $1000 in set-up fees and took three months of red-tape paperwork. Then I built a little online shopping cart, which also took months of work, just to sell my own CD. Musician friends asked if they could use mine instead of having to go through all of that work, so I said OK.
At first, I did this for free, as a favor, until it was taking up all of my time. Because it took me 45 minutes of work to digitize, stock, set up a new album in my system, I charged $35 per new album. Because it took 10 minutes of work to pick, pack, and ship a purchased CD, I charged $4 per CD sold.
Over the next 12 years, this made me about $20 million. - In 1999, I had learned a lot about hosting websites. Linux, Apache, PHP, SQL, FTP, DNS, Qmail, SpamAssassin, etc. I had done it for myself for my band’s website, then for CD Baby, and bought my own servers. So when friends would complain about their existing web-hosting company, I’d host them on my servers instead.
At first, I did this for free, as a favor, until it was filling up my server. Because each server cost me $300/month, and I had to hire a full-time person to manage this, I charged $20 per month. (In 1999 this was way cheap.)
Over the next 9 years, this made me about $5 million. - Since 2000, I’ve been sharing everything I’ve learned for free. I’m not the smartest guy, probably below average, but it costs nothing to share, and it’s the right thing to do, so I do.
Over the last 11 years, this made me incredibly happy and lucky, because of all the interesting people I’ve met by doing it.
Point being:
None of these things looked like a business venture.
All of them were just sharing something I already had.
People often ask me if I have any suggestions for what kind of business they should get into.
I tell them the only thing I know how to recommend: “Start by sharing whatever you’ve got.”
Reader Comments (7)
Excellent post Derek. So many people worry about not being an expert in an area that they withhold the value they can already give right now. Thanks for the examples you share. It really drives the point home that if we have a need others probably do too, and that can be a valuable business opportunity.
Profound.
Conicidentally I was just checking out Derek's YouTube channel where he give's away his entire "Uncommon Sense" presentation for entrepreneurs for free.
http://www.youtube.com/dereksivers
It's not easy to share something you do for free, especially if you are hoping to make money from it one day. This is nice encouragement to consider trying to though.
I love this story. I admire the ingenuity of the trajectory and it's a good business model. But having to use my credit card today to buy groceries sort of put me in a funk. I've been running on empty for years writing, arranging, performing, engineering and producing intelligent, original content. There's nothing it seems i can't do ... except make money. Should I take it personally or is it a genetic predisposition?
I like the way you write. It's simple yet full of great and fresh ideas! Love the pic!
An inspiring post Derek, thank you.
I guess the advantages are also that you don't have to invest a lot to offer your services for free as people will be forgiving. You can refine and improve what you're offering as people use your services. This is a good strategy for perfectionists (like myself) who have a tendancy to wait for everything to be exactly right before launching.
Another positive is it proves there's demand for what you're offering. If people don't want something, even if it's free, then let go of it and move on...
Eliza
Derek, your posts are always profound as a TED talk and simple as an English Muffin. I applaud this way of thinking about music, and business.
Your book Anything You Want is excellent, BTW.
Cheers,
Jonah Luke