Types of Internet Entrepreneurship

Entrepreneurship comes in many forms in terms of online businesses. Not everyone needs to and should build out the next Facebook.

Understanding the various types of entrepreneurship, their business models, and how they rank in terms of difficulty and risk-reward is something I wished I had more clarity on earlier.

We will rank the types of online business models from hard mode to easy mode here. Hard mode means really hard to get going but is a very leveraged business once you get it right.

Hard to Easy:

1. Large Scale Consumer Marketplaces (Amazon, Meituan)

2. Large Scale Consumer SaaS (Netflix, ChatGPT)

3. Large Scale Consumer Ad-Based Apps (Facebook, Google)

4. Recurring SaaS Businesses (HubSpot, Salesforce)

5. One-Time Payment Businesses (WordPress Plugins)

6. Tools to Start a Business (Boilerplates, Web Templates)

7. Paid Online Communities

8. Newsletters / Blogs via Ads, Sponsors

9. Courses / Ebooks

10. Agency / Service Business / Consulting - to be fair, almost all small businesses are service business

11. Subscription-based support (YouTube channel membership, Twitch, OnlyFans subscriptions)

12. Dropshipping / E-commerce

Order is not very precise of course. Good work in a lower category trumps lackadaisical work in terms of difficulty in another category. Also, the rule of thumb in increasing difficulty of monetisation model is ad-based / affiliate marketing → saas → marketplace fees.

Many entrepreneurs are drawn to moonshot ideas because they are exciting, capture public attention, and are highly glamourized. Venture capitalists and social media often highlight these high-risk, high-reward models, but the reality is that successful moonshots have low win rates and can be an exhausting journey for all involved. This is a fair game if backed by venture capitalists who help to share the risk.

However, entrepreneurship isn't limited to grand bets. Mastering simple profitable business models first before tackling more ambitious projects is crucial.

You can see it as stepping up the ladder. A conservative approach could work like adopting a barbell strategy. You take on high-probability, easier wins like a service business leveraging your current skills and network while funding and exploring moonshot ideas from there.

Ideally, both types of businesses can synergize, providing stability and innovation simultaneously.

Here is a picture I found online to illustrate these:

In short, it is a shift between one client (your employer) to many users paying you a small fee each.

Take a moment to assess your skills, resources, and interests to choose the path that aligns best with your goals.