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This week, we are diving deeper into distribution channels.
If you haven’t read the original post on distribution channels, start here.
This week, let’s explore the concept of bundling and unbundling, how this concept interacts with distribution channels, and what it means for our example business - my startup.
There’s only two ways I know of to make money: bundling and unbundling.
-Jim Barksdale, investor & former CEO of Netscape on the eve of the company’s IPO
When Jim Barksdale said this, Netscape was among the most hyped and exciting companies in the world - it went public 16 months after launching for ~$3bn.
It’s difficult to know whether successful people sound more intelligent because of their success (ie framing effect), or if they’re saying profound things because of their insight and intellect, which lead to success.
I have no idea which is the case for the above quote, but in this post, I’ll dissect the quote and show you an example of how it applies to my business, The Military Veteran.
WTF is bundling & unbundling?
Bundling is when companies package several of their products or services together as a single combined unit, often for a lower price than they would charge customers to buy each item separately.
A bundle is simply when a company aggregates a number of products and services together and sells you the entire package.
Conversely, unbundling is the exact opposite - breaking apart a package and selling pieces individually.
A classic example of how the internet facilitated bundling and unbundling is to consider the media landscape.
An example… media companies -
20 years ago, Americans consumed media by purchasing a cable TV package.
Cable TV bundled channels together, sold them to you as a package, then paid the content producers. Cable TV providers owned the distribution channel and customer relationship through bundling.
The internet made distribution simpler - content producers could sell directly to end users.
Netflix showed us how owning a customer relationship and distributing to them directly could make unbundling a lucrative endeavor.
Fast forward to 2019 - nearly every legacy content production company has a streaming service to sell directly to consumers. Unfortunately for customers, this means subscribing to a number of media companies to access the content we desire. Ironically, we’re back where we started with streaming services bundling their products like Hulu’s package which combines Disney, ESPN, and Hulu shows.
It all comes back to distribution channels
The internet has connected individuals and businesses at scale.
Phone lines enabled people to communicate across great distances, but the internet enabled them to connect more deeply, intuitively, and with greater numbers of people.
Because of the internet, content production companies no longer needed to rely upon distribution channels that are completely owned by a 3rd party cable company - instead, they could reach consumers directly.
Unfortunately for these legacy content producers, smartphones and social media created ample competition from amateurs - anyone can create entertaining content immediately distribute it directly to those who are interested - a la this newsletter.
Cool story, but what does this mean for a new business?
A few things -
When we evaluate businesses, we need to continue to think through the lens of distribution channels.
There may be ways to add value to an offering through bundling and unbundling.
How is this influencing my thoughts for TMV?
Our company helps employers hire military veterans into business leadership roles.
We do this by providing a service - gathering candidates and employers in one location at the same time.
With respect to how we provide value to candidates, we have a number of different products - most of them provided for free -
We post a lot of content - written, video, audio (podcast), and live events
We provide coaching and feedback on resumes, interviewing, etc.
We present specific roles to candidates on behalf of our clients.
We connect these veterans with other high performing individuals who can accelerate their careers.
At the moment, these offerings interact by virtue of the fact that they attract candidates to an offer - join us for a conference OR interview for roles.
Through the lens of bundling, however, I am looking at these different lines of effort in a new way.
I’m thinking about a cohesive way to stitch these offerings together into a cogent bundle.
How will we do this?
You’ll have to stay tuned…
What other examples of bundling or unbundling do you see around you?
What businesses are you excited about that bundle or unbundle in a novel way?
If you’re starting a business - are you bundling, unbundling, or is Jim Barksdale full of it and there are more than 2 ways to make a buck?
Let me know by hitting reply on this email.
You bundled the concepts in this tidbit quite well, excited to see you similarly nail the bundling of TMV services
Really been enjoying these RL posts. Concise, well written, digestible, sound business bites. Appreciate these!