Marc Andreessen once said, “There are only two ways to make money in business: One is to bundle; the other is unbundle.” While he credits this to his former colleague Jim Barksdale, this idea has resonated with me for almost a decade when I first heard it in 2014. While this process is not unidirectional, both bundling and unbundling play crucial roles in making money in business.
My current project, GarageID is exactly this, and we’re using Agile/Scrum to ensure we quickly build the right bundle for the automotive & motorsport world.
We’ve chosen to combine. The automotive world is fractured. We aim to change this.
High Level Considerations for Any Startup
- Bundling and Unbundling in the Digital Age:
- The digital age has witnessed a significant emphasis on unbundling, where traditional products and institutions are disaggregated into individual components. Examples include the transformation of music CDs into individual MP3 tracks and the unbundling of newspapers through blogs and topic-specific news sites.
- Digital education startups are now attempting to unbundle the traditional university model, reflecting a broader trend across various industries to reevaluate and redefine traditional bundled offerings. I think this is an amazing idea as most universities are scams these days.
- The Duality of Making Money in Business:
- To bundle or not? To unbundle or not? – This perspective sheds light on the dual nature of business strategies, where companies must choose between combining products and services into cohesive bundles or breaking them apart into individual offerings.
- The bundling and unbundling approach is not limited to the digital age but has historical roots. Barksdale shares a memorable quote from a roadshow during Netscape’s public offering, emphasizing the idea that these principles have been relevant for decades.
- Technological Evolution and Business Restructuring:
- Technological advancements drive the emergence of new bundles and the dissolution of existing ones. For instance, changes in distribution technology led to the unbundling of newspapers, and the advent of the internet facilitated the unbundling of music CDs.
- The cable industry (legacy media) is another example, where debates about bundling versus unbundling are prevalent. The ease of digital unbundling challenges traditional bundled cable offerings, leading to the rise of over-the-top systems delivering single-shot, unbundled content. We still have a long way to go with systems like Netflix, Disney+, Hulu, and more.
Consumer Preferences Are Always Changing
Our quest to bundle the right functionality for the automotive & motorsport world has been fascinating. Currently, the user landscape is used to silo’d applications and leveraging a suite of disparate systems. While this has worked as a function of market needs, users are getting fatigued managing multiple systems.
Do you own a car? Do you have to pay for maintenance and services? – What app do you use? – If you’re not using an app to reduce machine costs… why?
This has been one of the biggest results of feedback with our early-stage users.
Successful companies are those that navigate the delicate balance between bundling and unbundling, recognizing that both strategies are integral to the ever-changing landscape of business and technology.
I would go as far as to say that a it may be a powerful strategic advantage to review one’s product offering at least twice a year to consider whether to bundle more features, or unbundle (reduce waste) is necessary.
We’ve all used Microsoft Excel. We all probably use a less than 1% of the total features. This isn’t to say that Excel isn’t a powerful tool for the pro-users, but the majority of users don’t care about the power tools. They just want functionality that:
- works
- is valuable
- easy
To ensure 80%+ functionality usage rate is almost impossible. To get close is always the goal. You can do this in persona life as well. Retrospection on optimizing life is always a worthy time spent. It is my hope that all of us can reduce waste, optimize life for fullness of experiences, and ensure our lives are not wasted doom-scrolling social media.
Inspect and adapt, always.
All the best,
ps