How Irrational Behaviors Affect Your Business Model
"When crafting your business plan, don't assume that all market participants will behave rationally. Customers, vendors, partners and competitors sometimes do irrational things. When customers or partners seem to be behaving irrationally, make sure your business model makes sense, the problem may be on your side rather than theirs. When vendors or competitors behave irrationally, it can sometimes hurt you in the short run, but will generally help you in the long run, as long as your business is sufficiently flexible to withstand the temporary irrationality."
One Consideration in Building Your Business Model
"One way to build a business is to find a market which is divided into categories in which certain feature subsets are unavailable, and to offer that subset. For example, traditional brokerages was divided into deep discount (inexpensive trades, without advice) and full-service (expensive trades, with advice). Although the markets later blended together, there was an opportunity for a service provider to decouple the two features and sell just the advice without the expensive trades."