Business Model Hangers

A mental model for organizing and categorizing different business models, described by Shaan Puri as a way to pattern match and identify business opportunities.

Core Concept

• Brain organizes business models like clothes hangers
• Each "hanger" represents a distinct business model pattern
• New businesses can either:
  • Create a new hanger (novel business model)
  • Attach to existing hanger (variation of known model)

Benefits

• Helps identify patterns across different businesses
• Makes it easier to categorize new business opportunities
• Allows quick pattern matching of similar business models
• Creates mental shortcuts for understanding new businesses

Example Application

• KOA Campgrounds as reference model:
  • $40M annual revenue
  • Membership-based camping sites
  • Low-cost entry ($20/year membership)
  • Network of locations across country
• Can be used to understand similar businesses like:
  • Hip Camp ($50M raised)
  • Other outdoor/camping marketplaces
  • Membership-based hospitality businesses

Framework Usage

• Look at older established businesses for demand validation
• Study successful comparables in similar spaces
• Add modern improvements to proven models
• Focus on revenue and profit optimization
• Use as reference point for new business opportunities

This framework helps entrepreneurs quickly understand where new businesses fit in the broader ecosystem and identify proven patterns that can be modernized or improved upon.