You need multiple streams

If you can sing you are a threat. If you can sing and dance you are a double threat. If you can sing, dance and act you are a triple threat. The difference between them is that you can make a living doing one or all of them. The more you can do, the more likely you can make a living when one or two of your talents are not in demand. Why settle for one scoop of ice cream when you can have three?

This is how I evaluate businesses really. Are they a threat or a triple threat. Are they a single product company or do they have the ability to earn on multiple fronts. If the industry is an emerging one, surviving with a single product offering as the only source of revenue will be impossible for most. The landscape is littered with the carcasses of single threat companies to prove this.

I worked for one of Canada’s largest media companies to help them transition from a print/web world into mobile. Moving a monolith into the web was devastating for their industry and rethinking for mobile at the time was equally jarring. The company had multiple newspapers across the country, each with their own website and each with their own mobile app. They considered each of these as products. Print + web + mobile = 3 products. By far the biggest challenge was helping them to see that they only had a single product that lived in three distribution channels. This left them open to competitive forces and closed their eyes to greater opportunities.

When Research In Motion was at its peak it owned the early smartphone industry. Everyone carried a BlackBerry and they were Canada’s most valuable company. Then almost overnight they disappeared. As they started to decline in market share they scrambled to compete by releasing other products. They released a tablet after the iPad came out but it was a lesser product in comparison. Too little too late. It would be next to impossible for a company with declining marketshare to fight the likes of Microsoft and Apple and Google at the same time — each with multiple lines of $1B+ businesses.

Those companies can afford to fight longer because of it.

Choosing a second line of business needs to complement the first.

It may have seemed natural for BlackBerry to make a tablet as their second product — Apple did it. So did Microsoft. The difference is that both of those companies owned the operating system. BlackBerry didn’t have either. BlackBerry was also a corporate-first platform. Their focus was on corporate security so their natural next step should have been commercializing their security platform. Instead they got caught up in the consumer swirl and lost it all.

Almost at the same time as the rise of BlackBerry, another company was transitioning from a single product company into what would become the world’s largest online retailer. Amazon.

Jeff Bezos’ company was a one-trick pony. It sold books online but it did not stay there for long. Almost as soon as it became known as the world’s largest book store, Bezos started expanding the company’s offerings. They did it in a sequential way that opened up other products like membership (Prime), AWS, storage, music and video. Amazon bought Audible and Goodreads and used this combined force to keep people in the Amazon domain.

Single product companies are not all destined to fail but they are left exposed when something changes in their industry. When an incumbent refocuses or a new entrant emerges it is hard to defend against momentum and a declining market share. When you are the incumbent and an upstart emerges that starts disrupting your business (think Google vs Yahoo or Excite) and there is no other source of revenue, the challenge is mighty.

Waiting until your primary business is under siege is not the time to think about a second product. Desperation makes for bad decisions and business history is littered with the carcasses of those that waited too long.