To bundle, or not to bundle, this is the answer

Artyom Avanesov
by Artyom Avanesov
“There are two ways to make money in business; one is to bundle, the other to unbundle.”

This tenet leads back to a roadshow where a team of Netscape executives was pitching to an audience of investment bankers. One of the attendees probed Jim Barksdale, at the time the CEO of Netscape, about the risk of Microsoft bundling a browser into Windows. To just end the conversation Barksdale retorted:

 

“Gentlemen, there’s only two ways I know of to make money: bundling and unbundling.”

 

And with that, he left the gathering to catch a plane.

 

Bundling can be a powerful approach to developing products. But it is not always the right approach. Whether or not to bundle depends on your end-users’ jobs-to-be-done or tasks. And bundling when users are best served with an optimized single-purpose solution will lead to economic waste.

 

When the end-user has multiple overlapping tasks and a clearly defined role it makes sense to bundle. Otherwise, it does not.

The Designer bundle

Figma is perhaps one of the most effective bundles used in the software industry. Before its rise in popularity, most Product Designers were using Sketch – a vector graphics editor that pioneered the interface design tool as we know it.

 

Sketch felt like a breath of fresh air coming from Adobe. The interface was simple and easy to use. What the app lacked in features it made up for with its API that allowed anyone to build their own plugins. Sketch’s widespread adoption led to the birth of other designer tools like InVision and Zeplin.

 

Because the Sketch community offered a plethora of plugins the makers of Sketch were able to focus on building the best design experience possible.

 

But by succeeding in their mission they missed out on a critical opportunity.

 

Product Designers perform several interrelated tasks. But they do not work in isolation. Instead, they collaborate closely with business and engineering, and various other disciplines.

 

In the heydays of Sketch a standard designer workflow involved using Axure to create wireframe prototypes, Sketch for mockup design, InVision or Principle for prototyping, and Zeplin for developer handover. Sending around assets, e.g. icons required exporting and only the designer had access to the source files.

 

Although most of these tools interfaced with each other the process was still cumbersome. Integrations were limited, cross-app imports would sometimes fail, and continuous tool switching and asset exchange consumed a lot of time.

 

Naturally, this toolkit carried an economic cost. A mid-sized company that I was working for at the time was paying around 20,000 euros annually in InVision licenses (developer inspect is expensive). That’s 20k for one app! Unsurprisingly this led to discussions about who gets to use which tools.

 

Along came Figma which integrated design, prototyping, and developer inspect into a single app. Where Sketch was only available to Mac users Figma, thanks to its web-based nature, allowed anyone with a link to access the designs as they were being crafted in real-time.


Bundles have varying degrees of relationships and synergy. Both are measured in the context of the user. Does performing one task help them do another task more effectively? Similarly; do combined capabilities unlock value that would have been inaccessible had the capabilities been siloed?

User roles and tasks

We all have different roles in life. Someone can be a Product Designer, parent, and the one who cleans the dishes. But roles do not exist in objective reality. They are labels we assign to categories of people who perform common sets of tasks.

 

For example, we call someone who writes JS, HTML, and CSS a Front-End Developer. Add some back-end technologies to the mix and now they are labeled Full-Stack.

 

Some roles are clearly defined while others are more vague. It is well understood what the responsibilities of a Customer Service Representative are. But opinions will vary widely regarding one’s responsibilities as a parent. The more clearly a role is defined, the easier it is to create bundles for it.

 

In the workplace, roles are clearly defined. We call them job titles. Each title has a corresponding set of responsibilities which are carried out using tools. But titles rarely come with only one responsibility. This is especially true in white-collar work environments like Tech companies.

 

A Product Designer will do user research and ideation, design wireframes and mockups, and create prototypes. They will also communicate design requirements to the engineering team. The tasks are related because developer handover requires mockups, which require wireframes, which in turn require user journeys and ideas.

 

Designers use a tool for each of these tasks. But the process of sending information and assets between tools requires time and manual effort and is error-prone. It also comes at a cost to the designer because context switching consumes mental energy.

So why bundle?

A bundle that supports all of the above tasks could save the designer time and energy. But bundles also offer other benefits:

 

  • Improved data throughput. The ability to exchange data and assets between capabilities enables automation and improves productivity and efficiency while reducing the chance of error.

 

  • Reduced switching cost and learning time. Switching between tools with different information architectures and interfaces consumes mental energy. Bundles eliminate context switching costs by providing a coherent user experience.

 

  • New insights through data combination. New information can be produced by interpolating data from different sources. What would require a third app, e.g. a spreadsheet can be done within a single bundle.

 

  • Cost reduction. Every service comes with a subscription fee. The cost of a single bundle is usually less than that of multiple stand-alone services. A business can reduce costs by replacing the latter with the former.

 

Bundles are not only useful to individuals. They can empower entire teams and organizations.

 

We rarely work in silos. Throughout the normal course of a day, we collaborate with colleagues from different disciplines and departments. These collaborations involve exchanging data and materials we depend on to perform our tasks.

 

Someone from marketing might need input from sales. A Product Manager might want access to customer support tickets. But sending around zip files over email is a cumbersome way to work. Bundles can improve cross-team collaboration by providing the benefits mentioned earlier to entire organizations.

What about the consumer?

Bundles are highly prevalent in the B2B realm. But it does not mean they cannot be used in the consumer realm too. Facebook is a massive bundle of capabilities that enable users to perform tasks in their role as a friend.

 

Facebook capabilities have strong synergy because data produced in one part of the system is processed to improve the user experience in other parts. The content you engage with inside your feed helps Facebook suggest groups and other artifacts that might be of interest to you.

 

Revolut is another example of a consumer bundle. The mobile-first bank offers crypto and stock trading, fx transfers, wealth management, and numerous other capabilities in addition to its main retail banking service.

 

However, Revolut’s synergy is more limited. Stock trading does not improve fx transfers and travel insurance does not somehow augment the value generation potential of a savings account.

 

What Revolut’s capabilities have in common is that they all involve money. Hence all capabilities are predicated on the retail banking experience. They seemingly serve as a means of drawing different categories of people to their core banking product and monetizing the service.

 

Whether or not to bundle capabilities depends on your user. Do they have a clearly defined role that represents a substantial addressable market? And if so, do the tasks that they perform in this capacity overlap?

 

If the answer to both questions is yes then it makes sense to bundle. Otherwise, it does not.

Artyom Avanesov

Artyom Avanesov

I help businesses build digital products by designing and developing experiences for their users.