The Great Unbundling is Not so Great



For years, I was an active user. I was not the biggest, most avid user by any means. After a while though I came to rely upon the app. It even held a much coveted spot on the home screen of my phone. I had my lists up there, I relied upon its discovery feature, and it kept me connected to friends. Though I started out as a skeptic, I eventually came around and saw its immense value.

Then they unbundled. I could understand the reasoning. They had two major use cases and it seemed they were in conflict, stalling the growth of the app. By separating the two usage scenarios into separate apps, the thinking was that usage for both would rocket upward, Unhindered by extraneous features and uses, each app could be the best at what it was meant to be.

Unfortunately unbundling left me cold. Instead of one useful app that made my life easier, I had two apps strung together in a way that was disjointed and disconnected. Nothing flowed correctly, the notifications were annoying, and the experience of going back and forth between two different apps was jarring. Ultimately what was a home screen app only a few months prior was now deleted permanently from my phone.

I have been skeptical of the calls to unbundle apps. There has been a chorus of pundits praising the focus of single purpose apps. With the design ethos of Apple becoming so prominent and mobile platforms playing a more prominent role as our main computing platform, it was to be expected that design trends would change. Much of this has been welcome, especially given some of the horrific user experiences of past generations of software that served us up soul crushing bloatware.

At the same time though, we can go too far. We have taken the design mantra of simplicity to almost ludicrous levels of pettiness. I am seeing this with SaaS and mobile products for businesses. There are startups that are literally making nothing more than a feature or even less than a feature. Features sound great because they are easy to understand and do one thing really well. It is easy to explain and market a feature. The friction to get people to download or sign up for the app is lower.

The greatest features in the world do not matter however if they just create information silos. That has long been my complaint about all the various CRM and sales tools. You end up breaking processes and leaving bits of data exhaust across various systems. That is fine if you are only dealing with a few services, but can become maddening when it becomes multiple of services. Instead of enhancing one’s productivity, time just gets sucked away stringing together and making sense of a bunch of apps.

For the technically inclined or those that enjoy challenges, maybe it makes sense to cobble together a Frankenstein app approach. But who really has the time for that? One study found that SMB’s manage and use on average 14 different apps, all requiring their various logins, all with separate user experiences, and none of them particularly well integrated. At the micro-level, that might be fine, but across a company, these small inefficiencies begin to add up to real productivity and cost hits.

This is the ultimate battle between platforms and point products. The platform provides an all-in-one, all you can eat experience. But like a typical buffet, none of it is particularly great and you tend to eat too much. The point products do one or two things really well, but it is kind of like just getting served the appetizer and skipping over the rest of the meal. But now folks are waving the banner of simplicity and unbundled apps, which is kind of like getting nothing except the amuse-bouche and calling it a night. Expect to go hungry on that diet.

Speaking of going hungry, the startups pursuing this feature oriented strategy are going to run into a lot of challenges in scaling their business. Having seen firsthand the difficulties of growing a startup on $5 per user per month or on $1 per downloads, pitching a feature and pricing yourself as a feature is a surest way to starvation. Because the app is a feature, there is no room to price higher or even to upsell or cross-sell. If the play is to get scale through sign-ups, good luck with that. As Jason Lemkin recently wrote, the economics of building a large SaaS business do not favor the tool.

Unbundling product is rarely a good strategy for SaaS products. It has helped to inform app developers of the need to focus intently on user experience. However, unbundling itself does not work so well for users and the economics become difficult for vendors. I suspect that unbundling will not really last for consumer because no one wants to manage to use multiples of apps, especially if all those apps could just as easily be contained on one fully integrated app. If the use cases are truly so different and unique, then maybe the case for unbundling makes sense. Otherwise, build a great product that has the legs to grow as the needs of users grow.



Reprinted by permission.

Image credit: CC by Patrick Finnegan

About the author: Mark Birch

Mark is an early stage technology investor and entrepreneur based in NYC. Through Birch Ventures, he works with a portfolio of early stage B2B SaaS technology startups providing both capital and guidance in the areas of marketing, sales, strategic planning and funding.

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