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Why the Integrated Bundle Strategy Works

Synopsis: The cycle that sees organizations 'bundle' or 'unbundle' their software products for distribution (and growth) is on the cusp of another iteration. Harvard Business Review refers to this strategy as the integrated bundle strategy: offering a full ecosystem of applications sold together that may not all necessarily be best in class - yet together offer clients an unbeatable package. On December 1, 2020, it was announced that Salesforce would acquire Slack for $ 27.7 billion, heralding the cycle shift that is gaining speed.

"Ultimately, Slack was ripe for the taking. Entering 2020 it had lost around 40% of its value since it went public. Consider that after its most recent earnings report, the company lost 16% of its value, and before the Salesforce deal leaked, the company was worth only a few dollars per share more than its direct listing reference price." - Ron Miller, Alex Wilhelm of TechCrunch.

Why You Should Care: This is a huge event in the world of SaaS products, and is widely viewed as a 'failure' of Slack to thrive as a standalone business - despite CEO Marc Benioff calling Slack "the interface to everything." Neeraj Agrawal, general partner at Battery Ventures, says that purchasing Slack is Benioff's way of delivering on the failure of Chatter, Salesforce's own internal messager on the CRM.

My Take: What has caused this once-lauded company to be tucked-into the SalesForce lineup? Simply, Microsoft Teams has gained sufficient ground that the VC-track advisors for Slack determined that the growth trajectory was no longer sufficiently appealing. DropBox is also moving along the bundling path, with DropBox Paper, HelloSign, and DropBox Passwords being added recently to their lineup of capabilities.

Why The Acquisition Makes Sense: Teams is definitively NOT a better product than Slack, by all reviews. However, the convenience and savings potential derived from the bundling of Teams with MS Office365 has effectively cut off Slack's oxygen supply. Large companies like Microsoft (Office and Office365) and Adobe (Creative Suite and Creative Cloud) have been leveraging the 'bundling' model for a long time. Adobe, in particular, credits this strategy as a key part of their $95 Billion dollar SaaS company. In both the End-User-License and the Subscription business models, bundling has fueled significant growth and profit increases for these organizations.

Looking forward: In IndieHackers Podcast Episode # 186, Tyler King @TylerMKing of Less Annoying CRM and Courtland Allen @csallen explored some of the available options for indie hackers, with Courtland's usual flair for getting right to the heart of a topic.


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The Takeaway Lesson: New options may become more palatable to consider. These include:

  • Expanded product ideas or conversely, new product concept obstacles;
  • Potential exit strategies;
  • 'Tribal' collaboration opportunities.

Building Products With Bundling Potential

Synopsis: If third-party developers are building add-ons for a pre-existing product, that's a pretty good indication that a market exists. Either there's a problem to solve, or an opportunity to pursue.

Why You Should Care: A dirty little secret few companies will admit is that often, lower-quality (or simply, early-stage) products benefit more from bundling. Humans tend to find the "tyranny of choice" to be overwhelming, and bundling can help to reduce that concern.

Bottom line: Larger companies are often poor stewards of their acquisitions - ultimately leading to new openings in the market that indie hackers can exploit. However, indie hackers taking this route must be careful that they're not building for "yesterday's world".

Planning the Exit Strategy For Your Add-on Product

Synopsis: A sale (or merger) of the product with a larger organization looking for tuck-ins is a feasible path. However, timing projections are critical to the success of this strategy, since there's also a real risk that interest from both consumers and potential acquirers may not survive long enough to cash out.

Bottom line: The industry is littered with products that once had a viable future, only to see their 'parent' product develop similar functionality, decimating their potential market.

"Tribe" Collaboration vs. Lonewolf Mentality

Synopsis: Indie hackers may want to consider forming a consortium with like-minded peers, in order to develop a bundled distribution model.

Quote: A 'collective' of applications working seamlessly togther and compounding each other's capabilities, can fulfill the goal of "solving more problems for the same people", according to Tyler King. Games networks like IGN or Steam have been quite successful with this model. IGN is valued at over $400 million and brings in nearly $35 million a year in yearly revenue.

Some indie hackers may be reluctant to dilute their audience, feeling that their proprietary product should stand alone for best results. But, it's also feasible for a differentiated individual software product to go through both a bundle and an unbundle cycle over time, if there's sufficient user and market support.

The Takeaway: Bundling may be the only way to combat the growing "subscription fatigue" that's appearing among the most passionate early adopters of new software products. Solid niche functionality is all well and good, but once a user begins to surpass a certain level of SaaS subscriptions, one look at the monthly credit card bill might prompt a change of mind-set.

It's not a "winner-take-all" model, but solo founders and small indie teams are uniquely positioned to seize the opportunity.

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