Introduction
Over the course of the last decade, the growth of online business has been exponential. People selling services online, specialized services that have, otherwise, never been seen before in the conventional service market. These services can range from trading lessons, fitness coaching for specific body types all the way to spiritual teachers.
Online business as career hedging
While online marketing has existed since the 1990s, fueled by the undeniable asymmetrical power of the network effect, the online business model really gained traction during 2020, caused by COVID. So many people were left unemployed, isolated in their own homes, their professional future uncertain, people ultimately in danger.
We could use the exponential growth of the online services supply as an indicator of the health of the economy and social services. When people feel unsafe, they do not trust the conventional system anymore, is when they decide to take their fate into their own hands and design their revenue streams from scratch.
And who can blame them?
Updating the career path paradigm
People with college degrees, people who have sacrificed so much of their formative years in order to put themselves on the course of success, people that willingly opted to become indebted in order to achieve a level of status that would allegedly guarantee their high paying jobs. These people have been put in front of the decision to continue to pursue career paths that seemed certain but in reality are, in fact, extremely uncertain, or to pivot into entrepreneurship – without any prior education or experience in this particular field.
The reality is you can hold all the business degrees there are, Harvard Business School, MBAs, even PhD titles that secure you a job as a professor in a high level university… and you still wouldn’t know how to build and run your own business.
And yet, these people decide that online business is a safer bet than their current career path. Their decision is so categorical that they would pay tens of thousands of dollars just to have weekly Zoom meetings with someone who seems to have successfully done it. They fail to notice that their faith is in fact the fuel for the online business. Most successful online businesses are actually self referential. They teach you how to build your online business. The buyer is so desperate to improve his life that he would pay all his savings or even go deeper into debt in order to build a replica of the exact same thing they are paying for.
Why do you think so many people are selling online marketing knowledge? They don’t offer to do it for you, as a provided service. Instead they teach you how to do it yourself. This is a brilliant way of bypassing accountability.
“You’re not responsible for their results.”
Is an online business really a business?
A business is simply a vehicle to make money. We judge a business on how it can make money and keep money. It becomes a proper business when the excess capital is spent on things that have historically proven to generate revenue.
In the past, in order to generate consistent revenue, not even exponential revenue, a business needs:
- A market
- Distribution
- A price that perfectly fits at the intersection of supply and demand.
How do these change in the case of online businesses?
- The market is carved out from scratch
- Distribution occurs on a planetary scale
- The price is a reflection of the perceived value, similar to luxury goods.
Online business as education
It’s important to mention that a very successful variation of the online business is the online coaching business. No service is provided. These businesses sell knowledge, making them more of a tutoring program than a service provider. Conventionally, education is part of the social economy and it is regulated, many times government subsidized. Education is seen as a strategic investment for a nation. The business aspect of Ivy League universities is partly the tuition, but more so providing R&D services for private companies looking to expand their scope. This partnership benefits both parties, as universities use their resources to generate money while companies do not have to go through the excruciating process of developing their own R&D departments.
Therefore, we can agree that an online coaching business is not an educational facility. It doesn’t even resemble the business model of universities providing services in the free market.
Contemporary education means transformation
In order for an online coaching business to be competitive it must provide a unique, specific transformation to a specific target market. However if we look at conventional businesses, the resilient ones are always looking to expand their market. The service provided must be 80% repeatable in order to expand profit margin – this is part of Lean Methodology.
Successful online businesses come with the unique value proposition of a tailor-made program, compatible with the client’s needs and level of understanding. This would rule out the 80% repeatability that conserves, and even grows profit margins, specifically in the case of market expansion.
Online business distribution
The distribution of online businesses relies heavily on social media. They are platform dependent in the sense that their distribution is affected by algorithm changes. Perhaps the biggest liability in this distribution model is the reliance on trending keywords. Keywords are born accidentally and their value lies in novelty. As soon as one is successful, the platforms become oversaturated with content based on these keywords. Their novelty disappears due to overuse and they effectively become obsolete as distribution vectors.
The most successful online businesses, the ones that sell expertise without implementation, teach their clients to focus on “evergreen” topics: health, wealth, relationships. At a closer look, these topics are actually extremely vague. I believe that what the online businesses are actually selling is hope. The market of hope is infinite. Conversion is dependent on how plausible the transformation is and accountability is given back to the client. The investment is framed as a bet on one’s self, on their own consistency and capability to internalise the given knowledge.
What qualifies the educator
The fallacy lies in the fact that the online business clients have already been through an experience that proved that their capability to internalise information, together with their work ethic actually did not guarantee success. The experience is higher education.
The price of higher education is a barrier of entry that also conveys perceived value. The difficulty of achieving a degree is a barrier of achievement that builds character. However, for most, this experience is framed as transactional: if I do good and work hard, I will be rewarded with a stable career and I can live a safe and comfortable life. This rationale lacks critical thinking.
The rationale behind becoming a client for online businesses also lacks critical thinking. Again, who can blame them? It’s unpleasant to live in constant disbelief. People need to believe in something, to have hope for particular outcomes. The market of hope is infinite, therefore the price tag becomes an anomaly, independent of supply and demand.
This anomaly is reminiscent of stock markets. Companies can trade at even 100 times their enterprise value. However, the stock market is still a market. So the share price will always be dependent on consensus. One can argue that this phenomenon lacks morals and ethics.
Online business morals & ethics
Now let’s talk about morals and ethics surrounding this new type of business.
Morals are a set of internal beliefs – we can justify our righteousness through internal systems that do not relate to any external convention. If we feel we are acting in good faith, then we aren’t doing anything wrong from a moral standpoint.
Ethics however are more external. They represent adherence to a social contract, accepting a series of fundamental common rules, many times unspoken. It becomes irrelevant if we feel we are acting in good faith. There must be external consensus that decides our good faith.
In traditional business, we measure performance through KPIs. While we can’t measure morality as it is tied to an internal system, we can measure ethics. Sustainable businesses have a degree of ethics that are required for customer retention.
Online businesses however, mostly lack client retention because their transformation is finite. We graduate online business programs the same way we graduate universities. Through the perspective of value exchange, universities therefore lack the KPI of ethics, just as online businesses do.
Perhaps the more ethical version of an online business is the paid community. There is a barrier of entry in the community proportional to either how much one can afford, or how desperate one is to enter. People can be part of a paid community forever and the only KPI is finding and constantly interacting with like minded people. Sociology calls these intentional communities and they are a new way of forging human connections that are no longer dependent on proximity or family ties. The KPI for intent is the price people are willing to pay to be part of a community.
Online group coaching as an online business
I would argue that group coaching, while sold as lower tier, has undeniable value because, upon payment, the result is delivered instantly. This is probably the best value proposition for Ivy League universities and MBAs. We pay for access to intentional individuals, interested in the same topics as us. Academic knowledge is simply a backdrop to deep human interactions.
For 1-on-1 coaching, value is not only subjective, but it is stripped away. You are paying someone to be your friend. The money represents the skipping of steps required for human connection. 1-on-1 coaching starts resembling the business of “cam girls”, girlfriends for hire.
Personal take
This is why I am uncomfortable with selling time with me to strangers online. I am trapped in a cognitive bias that I had first noticed in 2028. Eight years ago I had the opportunity of befriending a woman whose main source of income was online girlfriend for hire. She had a stable partner she ended up marrying and starting a family with. This was simply a source of revenue. I never judged negatively from my own moral standpoint because neither the body nor the mind were corrupted in the process. However when asking myself if I would ever revert to this source of income in case nothing else worked, it would always be a categorical ‘No.’ Every time I would ask myself why I was so sure, I could not verbalise an answer. It was simply ‘No.’
Morally, I personally am OK with people exerting their free will, accepting whatever they require to accept, and I hold my friend in high regard. Ethically, I do not see a problem as both parties agree that value is exchanged. There is however a third layer that will always stop me from selling my attention that has, otherwise, not been earned. If I were to name this layer, perhaps it is spiritual. Not spiritual in the sense of esoteric teachings, but this is more referring to my spirit, my life force.
This is not an underlying Christian symptom, as Jesus teaches Christians about unconditional love. Perhaps the monetary exchange is the condition which would seem un-Christian. This is where the true anomaly of the distribution channel lies. The human soul is unprepared for this level of exposure and so we are taught to protect it by offering a paid ticket to access.
Conclusion
Traditional businesses separate the monetary exchange from the soul. This is what gives them resilience: people’s output can be shaped by the role and they themselves can be replaced, the business itself acts as an asset and is transferable, it can change ownership. Deliverables can be repeatable as long as they provide value.
Online businesses require a degree of selling something that is not physical nor measurable. We sell the quality of ourselves that makes us unique. We rent out our souls and whoever wants it can actually get it, conditioned only by monetary exchange. We expose our essence to the external and what we learn from this process is the market value of our souls. It therefore comes as no surprise that people just starting their own online business are uncomfortable with putting themselves out there.