Lectures on Entrepreneurship, by Johnny Monsarrat: Example: Vertical Chain -- Johnny Monsarrat Lectures

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This is a complex idea so here's an example. This is a vertical chain diagram. People hand me business plans to peruse all the time and typically there is no clear diagram of the vertical chain.

Here, for example, at the bottom in yellow, Turbine makes the technology and the content for a computer game. Microsoft boxes and distributes the game, as well as running a web site &#151 the portal for the game experience. Microsoft and Turbine share running the game on an ongoing basis. You can see the flows of money as well. Microsoft gets money from the customer and shares a portion with Turbine.

Since businesses are about making money, and a vertical chain shows how the money is passed from one partner to another (and who's doing what work) you can see how vital it is. Don't make your investors figure it out from various hints. Give them the high-level message clearly and without ambiguity.

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