“Alex…the fucking income statement! You’re worried about us making money! This other company…their revenue streams came from…everywhere.”
I had just gotten off of the phone with the seasoned CEO and founder of a startup I was doing a gig for a little less than a year ago. I loved what the company was attempting to accomplish, but I believed the legal fees necessary to scale the company would absorb their cash reserves before a marketable product was ready to ship. The ecstatic screaming about the income statement was in response to my worrisome, while less experienced, remarks about their business model.
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The CEO was analyzing the accounting documents of public companies with similar business models and infrastructure. He realized, and I would also eventually, that just because the legal fees had the potential to barricade the company’s goal and marketability in the short run, it didn’t mean they couldn’t generate revenue concurrently by bootstrapping what they did have, rather than what they planned to have in the future.
It’s important to consider that businesses often appear as if they generate one revenue stream, but actually generate numerous, concurrent revenue streams behind the public eye. For example, UPS isn’t just a shipping company and Amazon isn’t just a retailer. Some of these unique practices are so obscure you’d never know the company was profiting from them unless you looked at their financial statements.
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When the phone call winded down, the CEO spit out a few examples from the complimentary companies he was analyzing. I remember the example he provided dealt with one of the few successful music startups at the time. The company was not only providing a consumer subscription service, but behind the scenes was licensing music to other platforms, selling ring tones and even providing anonymous user data to advertisers.
Consider these two models of concurrent revenue streams:
1. Moby has the best selling electronica album of all time, Play. While the album dominated the charts for a few years, Moby found success by commercializing his creativity to less obvious (at least in 1999) markets: licensing. According to Wired, the tracks on Play have been “sold hundreds of times for commercials, movies, and TV shows – a licensing venture so staggeringly lucrative that the album was a financial success months before it reached its multi-platinum sales total.” Listen to the album. Even if you’ve never heard of Moby, you will probably recognize a handful of tracks just from being alive during its prominence.
2. Google is now hiring bond traders. While most major corporations utilize financial analysts to hedge foreign cash flows, it’s rumored Google may be using their vast data sets to build and run a hedge fund. Legalities aside, they have the valuable data to pull it off, as would a company like Facebook
These are examples of concurrent engineering applied to sales and marketing. It’s similar to flipping the stick, except you aren’t flipping anything; you’re just being resourceful with your stick. Moby is a musician, but he’s also a brand and advertiser. Google is a search engine, but they are also a hedge fund and hundreds of other things.
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Since the original phone call, I’ve dispersed the concurrent engineering advice to not only my own company, but to numerous artists, musicians and brands. Just because the thing you eventually want to sell isn’t ready, it doesn’t mean what you do have, right now, isn’t marketable.