Only 2 Ways To Make Money – Bundling & Unbundling 💸
Listen Up, IH! — Episode 11
“Humans don’t like too much choice.”
👆That’s Tyler King’s insight after running a successful SaaS business for more than 10 years.
Tyler is the founder of Less Annoying CRM — A complete CRM solution.
It’s a SaaS business he founded back in 2009 and it has gradually grown to more than $3 Million ARR today.
Tyler notes, when it comes to SaaS tools, people don’t like to put in the effort to choose a bunch of solutions.
They would rather pay for a single Bundle of such products.
But when a bundle becomes too broad, and people start using it for very specific niche problems, there is an opportunity to Unbundle specific features and build standalone niche products.
Tyler appeared on the Indie Hackers podcast back in December 2020. He & Courtland discussed the timeless principles of making money in business — Bundling & Unbundling
Salesforce acquired Slack back in December 2020 for a record $27 billion.
Slack is a chat and collaboration platform increasingly used by startups across the world. Salesforce is a massive enterprise cloud computing company.
The Slack acquisition makes sense of Salesforce, it can bundle the solution with its existing enterprise offerings and boost Slack’s distribution.
Some say this is the only way Slack could have survived against Microsoft Teams.
Slack vs Teams
Microsoft launched its enterprise communication app “MS Teams” back in November 2016. It was welcomed to the business by Slack with a full page ad in the New York Times
In this “open letter” Slack boldly claimed that Microsoft will find it hard to match Slack’s commitment to user success and delight.
And that Slack was here to stay.
In the 4 years since everyone has cheered Slack as the underdog in this battle – it is seen as an independent, brave software company fighting the might of Microsoft on its own.
Back in 2016, Slack had 4 million users. By 2020, it could increase it’s user base to 12.5 million.
When MS Teams was launched, it was bundled with Microsoft’s Office 365 plan that users had already paid for.
On Day 1, MS Teams had 115 million users.
That’s the essence of this David vs Goliath battle.
When the choice is between slightly better software and a feature-packed bundle with mass distribution – The bundle is likely to win out.
Salesforce acquiring Slack is an attempt to neutralize the massive distribution advantage that Microsoft has.
And leverage the power of bundling.
Popular bundles from the tech giants:
- Microsoft Office 365 – MS Office suite + OneDrive + Outlook + Teams.
- Google Workspace – All of Microsoft’s offerings + some unique offerings like forms, sites, and Jamboard
- Adobe Creative Cloud – 20+ tools for creatives including Photoshop and Illustrator.
Bundles by Startups:
- Dropbox – Cloud storage + e-signature + Productivity and Collaboration tools
- Superhuman – Fast Email + Gmail’s Addons built from the ground up.
- Humble Bundle – Bundling games from indie developers (Sold to IGN)
- Notion – Bundles Google docs + Trello + Airtable + Dropbox Paper + Asana.
Indie Hackers Bundles
Courtland suggested that maybe it makes sense of Indie Hackers to bunch together and offer their solutions as a bundle:
“Let’s say you’re someone and you’ve got a note-taking app and you’re somebody else who’s got a task management app or something. You think the two of you and maybe a few other Indie Hackers could come together and say, “We’re going to have a bundle for all of our software. Get all of us together for some cheaper price.”
In that way maybe it’s easier for you to sell what you’re doing together with other people than it is by yourself.”
It’s definitely good if you are a below-average player.
But it’s bad if you are above average and would have made sales anyways. Your bundle partners are just pulling you down.
But it helps to note that success at the early stage is so unpredictable for a startup that perhaps it’s always safer to bundle together than not.
Over time, Tyler has added a bundle of products to his company “Less Annoying CRM”:
Features include : CRM + Tasks and scheduling + Lead reporting + Collaboration + more
All at a simple price point – $15/user/month.
He believes bundling is not about adding more features to the same product but solving more problems for the same set of users.
Where can bundling work?
Tools used in similar contexts. When the user is in a similar headspace.
Productivity tools are a good example — Note-taking + Task management + Scheduling can be a good bundle.
Where bundling doesn’t work?
Products used in different contexts and headspaces.
Social Networks are a good example — People have very different use cases for Twitter, Facebook, Instagram, and Whatsapp. They would not work as a bundle together.
But a product bundling all the messaging features from all social platforms is a good solution.
The cycle of bundling and unbundling is constant.
As platforms grow and add new features they become general purpose.
They try to solve problems for all types of users instead of a particular niche.
Plenty has been written about the great unbundling of Craigslist. Startups like AriBnB and Tinder emerged from that.
And there is great potential in unbundling Reddit.
3 examples of successful unbundles:
- Tuple — Remote pair programming tool for developers.Tuple was started after Screenhero was acquired by Slack and got bundled into its offerings as a video chat solution.Remote pair programming was a validated problem. Screenhero had already cracked product-market fit.And suddenly there was a void in the market after the acquisition – Tuple filled that gap.
- Carrd — One Page Website Builder.There are plenty of general-purpose website builders out there. Like Wix, Squarespace, Webflow. And the old-school WordPress.Carrd solves a very specific niche problem of a single-page website builder. And at a generous plan of $19/year for 10 sites, it’s a game-changer.
- IndieHackers.com – A community of Indie BuildersIndie Hackers is an unbundling of Hacker News.There was a small section of bootstrapped entrepreneurs on HN who were interested in sharing their revenue numbers and learning from each other.IH tapped into that market and successfully unbundled Hacker News.Courtland built a thriving community by way of unbundling.
Unbundling opportunities of Indie Hackers:
- Notion is becoming a general-purpose tool. But soon there can be very niche products that come out of one of Notion’s use cases.
- Excel is a classic B2B opportunity. Anything that happens on excel and is not a spreadsheet task can be unbundled into a separate product.Niche excel use cases gave birth to CRM solutions and even billing and invoicing solutions.Related : Unbundling excel
- College is already being unbundled. In the form of niche as well as massive online open courses. (MOOCs)Apart from education, another way to unbundle college is to replicate the college experience.Build solutions to bring like-minded similar-aged people together on a single platform. Try to provide a similar social experience to a college at a much cheaper price.
- Paid Communities are an unbundling of open communities such as Twitter, Facebook Groups, and Reddit.
The bundling/unbundling game is not new, it can be traced back to Microsoft bundling internet explorer into its Windows OS, making it hard for users to install other browsers.
Leading to the fall of the premier browser at the time – Netscape, and even an anti-trust case against Microsoft.
Going forward, technology products will always find ways to create value by bundling and unbundling each other.
This quote from Netscape’s former CEO James Barksdale captures the essence of this concept—
“There are only two ways to make money in business: One is to bundle; the other is unbundle”
- Indie Hacker Ideas for Bundling (and Unbundling!) with Tyler King of Less Annoying CRM | IH podcast
- HBR interviewed Marc Andressen & Jim Barksdale in 2014 on the topic of bundling and unbundling
- The Great Unbundling – Power Of Vertical Networks With Greg Isenberg | Listen Up IH episode 2
Thank you for reading🙏
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Thanks to Seth King for editing this post
Photo by Joanna Kosinska on Unsplash