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Uber, Amazon, Netflix, Airbnb, and Tesla all have one thing in common: even though they’re some of the best brands in tech, the strength and viability of their business models are what propel them to the top of their industries.

A compelling brand image can attract a lot of attention and new customers, but without a sound and realistic business model to monetize all that attention and retain those customers, you’ll never grow or reach your potential as a business.

If you need some help refining your business model, check out how these top tech companies run the business side of things.

Billion Dollar Business Model Examples: Uber, Amazon, Netflix, Airbnb, and Tesla

Uber’s Business Model

2017 Revenue: $37 Billion

In 2009, Uber made it their mission to scrap the idea that taxis were the only way to get around a city. Today, Uber facilitates 15 million rides a day — without owning a single cab.

Uber achieved its monumental success so quickly by staying laser-focused on the speed, convenience, and cost of their service.

For example, customers can book a ride with the nearest drivers, see exactly how much their fare costs, and track their driver’s location all without leaving the app. Drivers can either reject or accept the ride request based on the user’s rating, and if they reject them, the rider’s request goes to the next nearest driver.

Riders can also cancel rides before or after their driver arrives, but they’ll have to pay a fee if they cancel their ride two minutes after requesting or if they take five minutes or longer to meet their driver.

Uber charges riders based on the estimated time and distance of their route and the current demand for rides in the area, which is billed directly to their credit card. To attract new drivers and retain current ones, Uber only keeps 20 – 25% of the fare and gives their drivers the rest.

Uber also charges customers a different fare depending on the type of car they want to ride in, which are Economy, Premium, Extra Seats, and More.

• Economy offers carpool opportunities with other riders or rides for one person or a group in a sedan.
• Premium offers Uber Black, which is a luxury ride with a professional driver.
• Extra Seats offers luxury rides for 6 people with professional drivers in a Black SUV or an Uber XL.
• More offers local taxi cab and wheelchair accessible rides.

Another way Uber makes money is through surge pricing. During times of high demand, like days with bad weather, rush hour, or holidays, they charge more per mile, based off the number of available drivers and ride requests in the area. It’s one of their most profitable revenue streams.

They also leverage their 40 million monthly active users and the visibility of their app as another way to make money. Restaurants, hotels, and other businesses can all advertise on the Uber app.

Uber’s other revenue streams include UberEATS, UberFreight, UberElevate, and their own line of self-driving cars.

Amazon’s Business Model

2017 Revenue: $177.8 Billion

With a market value that’s 46% larger than Wal-Mart, Target, Best Buy, Macy’s, Nordstrom, Kohl’s, JC Penney, and Sears combined, Amazon is one of the most successful companies in the world. And they can credit their company’s financial health to their constant innovation and entrance into different markets, which gives them a variety of revenue streams.

Here are the top four ways Amazon makes money:

Retail (67% of Net Sales)

The bulk of Amazon’s revenue comes from selling goods directly to consumers on their website. Since they order massive amounts of products from wholesalers, they can negotiate a cheaper cost and sell them for a lower price than their competition. They also ship their products faster because they can store inventory in their own network of warehouses. Amazon even manufactures and sells their own products, like the Amazon Echo and Alexa.

Amazon Marketplace (17% of Net Sales)

Amazon Marketplace is a platform that lets third-party sellers sell products on Amazon’s website. Sellers can also buy a service called Fulfillment By Amazon, which stores, packs, and ships your products from Amazon’s world class facilities.

Amazon earns commission off each of their third-party sellers’ sales, which is a hefty sum since 51% of their sellers make over $100,000 a year on the platform. Sellers can also buy ads that list their products on the top of Amazon’s search results and homepage.

Amazon Web Services (9% of Net Sales)

Amazon Web Services offer cloud computing infrastructure services to businesses for a yearly subscription fee. Migrating your company’s data to the cloud lets your customers access your software on any computer at any time through the internet, like Netflix.

Amazon Prime (5% of Net Sales)

By paying a subscription fee every month, Amazon Prime gives customers access to free two-day shipping on all items, free same-day shipping in eligible zipcodes, streaming services like Amazon Video, Amazon Music, and Twitch Prime, unlimited photo storage on Amazon Photos, the Kindle library, audio books, and much more.

Netflix’s Business Model

2017 Revenue: $11.6 Billion

If you work in the SaaS industry, Netflix’s business model is probably pretty similar to your company’s. Their subscribers pay for the service each month and can cancel their subscription anytime. To retain as much loyalty and revenue as possible, Netflix needs to focus on keeping their customer relationships long and healthy.

Fortunately, big data and analytics lets Netflix keep their customers happy. Knowing their subscribers’ behavior and preferences on the platform allows Netflix to personalize each of their customers experience with unique recommendations. They can also predict and understand if the content they buy and create will actually resonate with their subscribers.

Streaming and DVD services are Netflix’s only two revenue streams, but they rake in almost $1 billion per month.

To attract new subscribers to their streaming services, Netflix offers people a free month trial of any of their plans, and after it ends, they can continue their membership by paying for one of three plans:

• The basic plan for $7.99 per month, which lets you watch Netflix on one screen only
• The standard plan for $10.99 per month, which lets you watch Netflix on two simultaneous screens
• The premium plan for $13.99, which lets you watch Netflix on four simultaneous screens

The majority of Netflix’s revenue comes from streaming, but they won’t abandon their DVD service anytime soon. It helped them enter the movie rental market, eventually tear down Blockbuster, and still makes a profit today.

Netflix’s DVD and Blu-Ray arm offers free 2-day shipping and no late fees. You can subscribe to one of three plans:

• A starter plan for $4.99 per month, which lets you watch one disc at a time with a two disc limit per month
• A standard plan for $7.99 per month, which lets you watch one disc at a time with an unlimited amount of discs per month
• A premier plan for $11.99 per month, which lets you watch two discs at a time with an unlimited amount of discs per month

Airbnb’s Business Model

2017 Revenue: $2.6 Billion

Airbnb is like the Uber of accommodation. They connect over 140,000 travelers with hosts in more than 190 countries everyday, without owning a single property.

Airbnb blew up in popularity because they gave hosts an opportunity to run a side hustle that has no overhead costs and attracted travelers with more affordable and authentic visits.

Guests can book a room in a local hosts’ home that’s much cheaper than a hotel — most hosts don’t depend on Airbnb as their main source of income, like a hotel does. And staying at a local’s home better immerses guests in their destination’s culture.

Airbnb also has a relatively simple listing and booking process for hosts and guests. When a host lists their property details like pricing, amenities, and location on Airbnb, the platform will send a freelance photographer to take professional photos of their home to put on their listing.

When travelers search for a place to stay, they can filter properties by price, amenities, and city. Once they book the property through Airbnb, the host has to approve the guest. Hosts can gauge their potential guests’ character by looking at their reviews from past hosts on Airbnb and their social media profiles. The guests and hosts can rate and review each other after the stay.

Airbnb’s business model is unique because they earn revenue from both their hosts and guests. Since they offer free listings to their hosts and free membership to their guests, they collect a commission fee from hosts and a transaction free from guests. Airbnb charges hosts a 3% fee for every booking they get through the platform and charge guests 5-15% of their booking cost.

They also offer a subscription to their own travel magazine, partner with hosts who provide work-ready homes for business travelers, and partner with locals who lead guests through immersive experiences in their community.

Tesla’s Business Model

2017 Revenue: $11.7 Billion

Tesla is unlike any other car company. They engineered and introduced luxury sport cars that run entirely on electricity and entered the automotive industry with an uproven business model: a direct sales approach complemented by superior customer service and their free Supercharger network.

Direct Sales

Most car manufacturers sell their cars through franchised dealerships, but Tesla wanted to cut the middleman out and create a better buying experience by selling their cars in flashy showrooms and galleries. Tesla also lets people customize and purchase cars on their website.

Service Centers

At Tesla’s service centers, customers can charge or service their cars. And by building service centers in certain areas, they hope their commitment to customer service will catch the attention of other luxury car owners and generate more demand.

The car company also offers the help of Tesla Rangers — mobile technicians who service their customers’ vehicles at their house. They can even fix a car’s software issues online since Teslas can send data to technicians through the internet.

Supercharger Stations

Tesla’s network of supercharger stations lets customers fully charge their cars for free in just 30 minutes. Tesla built this network and offer free charging because they know no one will buy their cars if it’s hard to charge them. An ample amount of charging stations around the country will accelerate the acceptance of electric cars, just like how gas stations enabled the world-wide adoption of gas cars.

Other Revenue Streams

Tesla also sells home charging installation services, energy storage systems for homes or businesses, solar panels, solar roofing, powertrain systems and components to other auto manufacturers, and will start producing an electric semi-truck in 2019.

What Business Model is Right For Your Company?

Choosing the right business model for your company is crucial, but you should take your time when considering your options. Even though each of these companies rake in billions of dollars of revenue each year, they all have different business models.

There’s no business model that’s perfect for every company. But if you can discover some untapped opportunities in your market and truly understand your customer’s pain and pleasure points, you could find the perfect business model for your company.

Raise your hand if you are maniacal about monitoring your blog traffic.

Is your hand raised? Mine is, too. I check out traffic every day, sometimes multiple times a day. Most of the time, it’s great to be so in-the-weeds — if I notice a sudden dip in pageviews, I can quickly react.

Other times, it’s much more helpful to zoom out. With a bird’s-eye view, you can see patterns that are really important, like how fast your blog has been growing. Depending on that answer, you can better staff your team, fight for budget, and allocate resources.

One way to figure out how fast you’re growing is to run a regression analysis on your monthly traffic. (Even if you haven’t had a math class in years, I promise it’ll be fairly painless.)

In this post, we’ll explain what a regression analysis is, when you might use a multiple regression analysis, and how to figure out what your regression analysis is telling you. (Though the example we use is for blog growth specifically, you can run a regression analysis on many of the metrics you have in your business, too.)

As long as you have only one independent variable (ex: time), one dependent variable (ex: blog traffic), and a fairly large sample size, regression analyses can tell you a lot about your blog traffic growth.

To determine the relationship between two variables, we’ll find the best-fitting line for a set of data. This best-fitting line represents the general direction in which the data is going. To understand how fast your traffic is growing, you need to know the components of a regression analysis.

The Anatomy of a Regression Analysis

There are three different things you need to know about a regression to analyze it properly. Here’s what one looks like for reference:

1. Scatter plot

To run a regression analysis, first we need to plot our data points — and the best way to display the data is through a scatter plot. The X-axis is the independent variable, and the Y-axis is the dependent variable.

2. Best-fit line

We’ve already covered what a best-fit line actually means, but you should also know which types of lines you should look for. There are three major types of lines you should investigate:

Linear

This is a straight line — it means you’re growing steadily. You’re progressing at the same rate over time. Here’s what that line looks like:

Exponential

This is a line that curves upward very quickly and doesn’t flatten out — you’re progressing at a faster and faster rate over time. Here’s what that line looks like:

Logarithmic

This is a curved line that flattens over time — basically, you’re progressing at a slower and slower rate over time, and potentially reaching a “ceiling” where you wouldn’t expect to grow much more. Here’s what that line looks like:

There are more types of lines than these, but these are the most important for you to know.

3. R²

R², or R squared, is a number between 0 and 1 that tells you how well the line fits the data set. The closer to 1, the better the line fits the data set — and to draw correlation conclusions from these graphs, you want to be fairly close to 1. So with an R² of 0.98, you can say that 98% of the variance in Y is explained by the variance in X.

Multiple Regression Analysis

Regression analyses don’t all just compare two variables to each other, though. If you have more than one independent variable (or “predictor”) affecting your data, you might want to see if each of them are individually influencing the trend you’re seeing. To do this, you’d need to run a multiple regression analysis.

A multiple regression analysis helps determine if a set of dependent variables have an influence on something’s performance. Think of it like multiple linear regression analyses, where you want to test the individual regression of two or more independent variables on the same dependent variable. For example …

• In a linear regression analysis, your Y axis = blog traffic and your X axis = time.
• In a multiple regression analysis, Y = blog traffic, X¹ = time, X² = paid advertising, and X³ = news articles.

How to Interpret Multiple Regression Analysis

In the first example above, you’d simply want to see if time has anything to do with the growth of your blog’s traffic. In the second example, you’d want to see if time, paid article promotions, and news articles each helped grow your blog traffic.

So, when analyzing blog growth, you’d start with one linear regression test in Excel between Y and X¹. Your Y value might be all traffic excluding traffic from X² (paid promotions) and X³ (news articles). Then, run a regression test to find your R², then another with traffic that includes X², and another with traffic that includes X³.

Consider our original regression analysis graph at the beginning of this article. Now see it right above this paragraph, with additional plots. The red circle on the left could be traffic from paid article promotions, whereas the circle on the right could be traffic from news articles.

Either of these independent variables can change the R² value of your trendline, and suddenly there’s an exponential regression between your news articles and your total blog traffic.

To figure out how your traffic is trending, you basically need to run a regression analysis using each of the three lines mentioned above, and then compare their R² values. The one with the highest R² is the best fit for your data.

Warning: You may find that none of them have a high R² or that the highest R² isn’t actually that close to 1 — that means your data doesn’t fit any of these lines exceptionally well. In those cases, you should gather more data and then re-run the regression analysis.

Here’s how you can run a regression analysis in Excel.

1. Export your data into Excel.

In our example, we’ll be loading blog traffic numbers into Excel. (HubSpot customers, you can find this information in your Sources report — and make sure to select your blog subdomain from the top dropdown before exporting.)

Once you get the export open in Excel, make sure to remove all other information besides the row for each month and the row for traffic. HubSpot customers, you can find all the information you need under the “Visits” tab.

2. Graph the data using the scatter plot function.

Having located your exported file, your data will open in a new Excel spreadsheet. Organize your data the way you want them in each cell. When analyzing blog traffic over time, for example, it makes sense for “Time” to take the X axis and “Traffic” to take the Y axis. So we’ll dedicate two separate rows in Excel for these metrics.

3. Open your trendline options.

In the top navigation, choose ‘Chart Layout‘ > ‘Trendline.’ This will open a dropdown menu of options for trendline types. These include:

• Linear.
• Exponential.
• Linear Forecast.
• Two Period Moving Average.

You can also select ‘Trendline Options,’ where you can set additional preferences for the trendline you want to use.

4. Choose which type of trendline you’d like to test.

Under ‘Type,’ select which line style you want to use in your regression analysis. For our blog traffic test, we’ll use linear, as shown in the screenshot below.

5. Find your R² value.

Remember what R² is? This number between 0 and 1 indicates how much your trend line actually fits the shape of your scatter plot. Select ‘Options,’ then ‘Display R-squared value on Chart.’ R² will appear next to your line. After you’re done, click ‘OK.’

6. Record R² back in your spreadsheet.

In the cells to the left of your graph, record the R² value that was displayed at the end of your scatter plot’s trendline.

Plan on running more than one regression analysis, each with different trendlines, then recording each of their R² values in their own cells in your original spreadsheet — as shown below. This will allow you to determine which type of trendline best explains the shape of your scatter plot. The type of line with the R² closest to the number 1 is your best-fitting trendline.

7. Remove your trendline.

Click on the line, then hit “delete” on your keyboard. Time to see if a different trendline more closely supports your data trend.

8. Run steps 4-7 again using new types of trendlines.

Repeat steps 4 through 7 for exponential and logarithmic lines. The more trendlines for which you find R² values, the more accurate your regression analysis will be. You want to be absolutely sure of the type of trend your data is showing, and stopping after one linear regression analysis is often not enough testing to draw a conclusion from.

9. Compare R² values. Whichever is nearest to 1 is the best fit.

If you’re linear, you’re growing at a steady rate. If you’re exponential, you’re growing at an increasing rate. If you’re logarithmic, your growth is slowing.

It’s possible that none of them are a great fit — see the warning above for more information on this.

In our example, exponential regression is the best fit because it has the highest R², at 0.896, and all are relatively close to 1. (Click the image below to enlarge it.) This means the exponential line is the best fit for your blog growth, and since it’s increasing exponentially, you have been growing quickly.

That’s it, folks! By now, you should have an idea of how fast your blog is growing. Remember, this is only an indication of your past growth. Anything can happen in the future to throw off your traffic.

Image credits: Math is Fun, SOS Math

Content moderation on social media sites remains a hotly-contested topic.

This year, congressional committees have held not one, but two hearings on the “filtering practices” of social media networks. And while some of these lawmakers begged the question, “Are networks suppressing content from one stream of thought or another?” — these days, there’s another big question in the ether.

Are social media companies responsible for the content published on their networks — especially when that content is factually incorrect?

65% of People Think Social Media Sites Should Remove This Content

The Current Climate

The above question arose at a recent hearing on foreign influence on social media platforms, where Senator Ron Wyden broached the topic of Section 230: a Provision of the 1996 Communication Decency Act that, as the Electronic Frontier Foundation describes it, shields web hosts from “legal claims arising from hosting information written by third parties.”

But those protections are speculated — including by Wyden himself — to be out-of-date, considering the evolution of content distribution channels online, and both the volume and nature of the content being shared on them.

Ron Wyden: “I just want to be clear, as the author of section 230, the days when these [platforms] are considered neutral are over.” cc: all of Silicon Valley

— David McCabe (@dmccabe)
August 1, 2018

That includes content pertaining to conspiracy theories, or that is otherwise factually incorrect.

The former has been top-of-mind for many in recent weeks, with the removal of accounts belonging to Alex Jones — a media host and conspiracy theorist who attempts to frame mass shootings and other tragedies as hoaxes — from Facebook, Apple, and YouTube. 

But what is the public opinion on the matter  — and to what extent do online audiences believe social media platforms are responsible for the presence of this content on their sites?

The Data

The Content Itself

We asked 646 internet users across the U.S., UK, and Canada: Do you think social networks should remove factually incorrect content, like conspiracy theories?

On average, 65% of respondents said yes, with the highest segment (67%) based in the UK.

Data collected with Lucid 

The Accounts and Users Sharing It

Then, we wanted to know how people felt about the moderation of the publishers of that content: the accounts and users distributing it or sharing it on social media.

We asked 647 internet users across the U.S., UK, and Canada: Do you think social networks should remove users or accounts that post factually incorrect content, like conspiracy theories?

On average, 65% of respondents said yes, with the highest segment (68%) based in the U.S.

Data collected with Lucid

The Responses in Context

Conflicting Standards

Many point to a lack of transparency around the practice of content moderation as a major cause of certain networks’ inability to more quickly remove information and accounts of this nature.

As @sheeraf writes on Facebook, the problem is transparency. They don’t and won’t say how many strikes someone like Alex Jones gets before a post or account is taken down. How is anyone left to believe there isn’t editorial judgment here?

— CeciliaKang (@ceciliakang)
August 8, 2018

In an interview with Recode‘s Kara Swisher, Facebook CEO Mark Zuckerberg offered very little in terms of a tangible explanation of how the network decides what — and whom — is allowed to publish or be published on its site.

“As abhorrent as some of those examples are,” he said at the time, “I just don’t think that it is the right thing to say, ‘We’re going to take someone off the platform if they get things wrong, even multiple times.'”

After Facebook later removed several Pages belonging to Jones, the company published a vague explanation of its criteria for removing these Pages.

As company executives have explained in the past, Pages and their admins receive a “strike” on every occasion that they publish content in violation of the network’s Community Standards. And once a certain number of strikes are received, the Page is unpublished entirely.

What Facebook will not say, however, is the strike threshold that must be reached before a page is unpublished. It remains mum, the statement says, because “we don’t want people to game the system, so we do not share the specific number of strikes that leads to a temporary block or permanent suspension.”

But that statement could suggest that, since the system is even able to be gamed, it’s possible that different Pages are given different thresholds, or that some more easily receive strikes than others.

The objectivity of content moderation remains a challenge. And despite Facebook’s publication of its Community Standards for public consumption, certain reports — like an undercover investigation from Channel 4 — indicate that content moderators are often given instructions that conflict with those very standards.

Dispatches reveals the racist meme that Facebook moderators used as an example of acceptable content to leave on their platform.

Facebook have removed the content since Channel 4’s revelations.
Warning: distressing content. pic.twitter.com/riVka6LcPS

— Channel 4 Dispatches (@C4Dispatches)
July 17, 2018

The Moderation Onus

There appears to be widespread phenomenon of social media networks downplaying their respective levels of responsibility, in terms of moderating this type of content.

While Facebook, Apple, and YouTube actively removed content from Jones and Infowars — which is said by some to be far from a sustainable solution — Twitter has allowed this content to remain on the platform, claiming that it’s not in violation of the network’s rules.

Accounts like Jones’ can often sensationalize issues and spread unsubstantiated rumors, so it’s critical journalists document, validate, and refute such information directly so people can form their own opinions. This is what serves the public conversation best.

— jack (@jack)
August 8, 2018

Twitter CEO Dorsey went so far as to place that responsibility not on the network, but on journalists, who he said should “document, validate, and refute” claims made by parties like Jones — which has actually been done repeatedly.

The timing of Dorsey’s statement is particularly curious, given the company’s recent selection of proposals to study its conversational and network health.

The inconsistent response by various platforms to content from and accounts belonging to Jones and Infowars point to flaws in the development and enforcement of community standards and rules. Where one network won’t reveal how many strikes until “you’re out,” another says targeted harassment isn’t tolerated on its site — and yet, dismisses many reports of it as non-violating.

Hey @jack did I do this right pic.twitter.com/OafLJsO12F

— Caroline Moss (@socarolinesays)
August 8, 2018

“The differing approaches to Mr. Jones exposed how unevenly tech companies enforce their rules on hate speech and offensive content,” writes The New York Times. “When left to make their own decisions, the tech companies often struggle with their roles as the arbiters of speech and leave false information, upset users and confusing decisions in their wake.”