A pre-revenue founder hired me to prepare his company for an investment raise. He had written a business plan dozens of pages long. I told him we needed to get the story down to ten slides in ten minutes.
The Conversation
In the course of interviewing him, I asked a basic question: How does the company make money?
“Subscription revenue,” he said. Companies would pay for access to valuable industry-specific newsletters.
Okay. Subscription business model.
But no, there was more. The company would publish a database of special information that customers could buy at a premium. Customers might also want custom reports. And there would be hourly consulting services.
The conversation continued until the founder had enumerated eight different revenue streams. He was excited: “See how fantastic this is? We’re going to be making money in all these different ways.”
So I asked the questions I knew an investor would ask. Which stream would be the largest? Hard to say. Which would be easiest to obtain? He did not know. If he could have only one, which would be most desirable? Again, he could not choose. His answer was that the opportunity was really about all of them.
The Problem
That answer exposed two different risks. If the business worked only when seven or eight revenue streams came to fruition, then too many independent things had to go right. If it needed only one or two streams, but management could not choose which to pursue first, the company did not know where to start.
An investor did not need a catalog of every conceivable way the company might someday collect money. The investor needed a credible starting engine: a specific customer, an urgent problem, a delivery model, and evidence that the economics could work.
The Work
I evaluated the streams against customer urgency, sales cycle, delivery effort, margin, recurring potential, and the evidence already available. We reorganized the pitch around the most defensible first stream and treated the others as later expansion opportunities.
The distinction was grammatical as well as strategic. The pitch should say: “We are going to make money this way. If that succeeds, these additional opportunities become available.” Six of the seven secondary streams belonged in the future tense.
People sometimes point to Amazon as proof that a company can support many revenue streams. That comparison skips the sequence. Amazon started by selling books online. Other retail categories came later; web services and the broader ecosystem came much later. A pre-revenue startup should compare itself with Amazon at the beginning, not Amazon after decades of expansion.
The Result
The ten-slide story gave investors a business they could evaluate, and it gave the operating team a practical first market to pursue. Multiple revenue streams can eventually make a company resilient. Before revenue, they can make it incoherent. The company needed one credible place to begin, with the remaining opportunities preserved as options rather than dependencies.
See other Early-Stage Focus: Demand Validation
