
"When I see a business model with 5 revenue streams, I know they really have 0." - robfitz
http://galondon.com/blog/alex-osterwalder-on-simple-business-models/
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freejack
Perhaps its just my read, but I think the original post confuses revenue
streams with business models with products. It seems to flip from business
model to product design to revenue streams back to business models and
finishes with a vague statement about "core".

Selling complimentary products and services to overlapping and peripheral
market segments is an extremely valid and sustainable strategy (Apple). Using
different methods of distribution to attack different market segments with
similar products works extremely well (Amazon, Google). Launching additional
lines of business to attack unrelated markets using a singular strong brand
also has merit (Virgin).

The key really is "don't have a shitty business model" not "don't have
multiple revenue streams".

On the other hand, I really appreciate Rob's points about how clever often
means convoluted (I am always wary of "complicated") and that mediocrity and a
lack of focus can be dilutive.

~~~
SaintSal
I think the quote from Alex was in the context of a hypothetical business
model in a pre-traction startup - it was a tangible way to make the point
about the problem with convoluted models at that stage.

~~~
freejack
ahh, yes - that makes a lot more sense.

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ryanwaggoner
This is ludicrous. The fact that Google only has one revenue stream is one of
their greatest weaknesses, and they know it, which is why they're aggressively
expanding into everything under the sun. And as long as we're cherry-picking
examples, why not Microsoft or Apple or GE?

Ultimately, using Google or any other Fortune 500 company as a model for how
you should do business as a fledgling startup is probably not a good idea.

My startup-land rebuttal for this claim would be 37signals:
[http://37signals.com/svn/posts/1123-theres-more-than-one-
way...](http://37signals.com/svn/posts/1123-theres-more-than-one-way-to-skin-
the-revenue-cat)

~~~
hapless
Google is diversifying because they've already tapped out their first revenue
stream.

Early on, as a developing firm, Google focused on that single revenue stream
to great success.

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epo
It is not the best written article but I think that some people here are
wilfuly misrepresenting it (maybe being a bit defensive?).

He is clearly talking about clarifying your business model in the early (pre-
launch?) days of a startup. In that context everything he says about
simplicity and focus should be kind of self-evident.

To crudely paraphrase, if you haven't got one solid good idea (revenue stream,
whatever) then 5 bad ones probably won't help you.

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bashtoni
This rather violates the idea of 'sell your by-products' though doesn't it?

I agree for the initial phase of a startup this is a good strategy, but does
it really make sense to ignore additional revenue streams which might actually
be better than those you originally decided to concentrate on?

~~~
chc
I think the point is that those byproducts are just that — byproducts, not
part of your core business plan. If your business is relying on byproducts
rather than just exploiting them when they appear, you have kind of a fragile
model.

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corin_
> _If you are in a position to say: "No problem, we didn’t really need them
> anyway," then why were you wasting time talking to them at all?_

Maybe because it was a good way (or a potentially good way) of making money?

Maybe because you wanted to have a foot in the door in what might turn into a
full pivot?

The example of Google is a terrible one, because sure they make all their
money from advertising, but based on the "You want to focus on the most
promising possibility, exclusively, until it’s no longer the most promising
possibility" logic, Google shouldn't be doing anything except working on their
search engine, not branching off and spending time/money on gmail, maps, plus,
etc. etc. etc.

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SaintSal
Rob focused on the aspect of Alex' interview about the benefits of simple
models to test. This helps invalidate them quickly, enabling you to progress.
The flip-side is that you keep a portfolio of business model hypotheses, which
you can test sequentially.

So if you put all 5 revenue sources in a single model, and one of them fails,
you can justify continuing testing that business model to yourself because
there's always another revenue source to test. (This is compounded quickly by
all the possible permutations of value proposition, customer segment, channel,
relationship type and engines of growth.)

Whereas, if you have simple models to test, and the single revenue source
fails, you can take action on this by crossing off that specific model and
moving on to the next one.

Simpler models in this case help you pull out discrete and actionable
learning, and to focus on one thing at a time, and move on quickly if the
concept doesn't check out.

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nattyackermann
A concise business model PLUS being adaptive to change, with good mitigation
plans.

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melc
I agree with other commenters, that sometimes you try other revenue streams in
order to see how the market or potential customers might respond. If you see
any good signs then one may choose to focus and strengthen these options.

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pbreit
Agree with some that the post is a bit confusing. I think the point is, Pick
one: transaction fees, ad sales, professional services, software licensing,
subscription fees, etc.

