An online startup is a company that delivers its product or service entirely or primarily through the internet, with no required physical presence. The model encompasses SaaS, e-commerce, content and media businesses, online marketplaces, and digital service businesses, with no required physical retail location, manufacturing footprint, or in-person service component. It is distinguished from traditional startups by its ability to acquire customers, serve them, and bill them without ever meeting in person.
The four main online startup models each have distinct economics. SaaS (software as a service): customers subscribe to access cloud-hosted software, with recurring revenue and gross margins typically in the 70 to 85 percent...