Bundle of Joy
Alligators can reproduce immaculately — they can pop out brand new baby alligators eggs from just a mom. This… doesn't seem like a lot of fun. Nature doesn't like the idea either. There are reasons why nature might prefer mixing genes — continuing the family tree with just a single branch tends to lead to traits that make a species all susceptible to extinction from the same shortcomings. Natural selection tends to win out, so, sexual reproduction usually wins too.
Dealmakers are also into it — mixing genes. M&A is the corporate equivalent of boot-knocking. A way to think about (successful) mergers is from this position: they mix the genes of two different companies, take the most advantageous stuff and provide a chance to throw out the parts that doesn't work. It can make companies fitter. In the end, successful mergers produce a bundle of joy that is the best parts of both corporate parents.
To Bundle or To Unbundle
Netscape founder Jim Barksdale famously mic dropped the tautology "There are only two ways to make money in business: bundling and unbundling." Something is either becoming a bundle or a not becoming a bundle, and that covers, well, everything. Somewhere in that word salad, there's something useful.
Banks have been effective bundlers - you can deposit your paycheck, get a mortgage and car loan, day-trade options, receive a report telling you where you can cut your credit card spending so you can lose more money trading day-trading options all from your mobile app while you use points to vacation in Cancun. This is a useful bundle.
At the other end of the spectrum, TV has violently unbundled over the past decade. Cable companies used to provide it all. Now, who doesn't have Netflix, Max, DisneyPlus, YouTube, Amazon Prime Video and a broadband service. This unbundle gives customers choice, which is also useful.
So, if you're a business, probably, you should be bundling or unbundling something.
Bits and Pieces
Back in 2021, Viasat, a company that delivers bits from space for broadband internet, agreed to merge with Inmarsat, another company that delivers somewhat fewer, but more reliable bits from space. (You can ready a theory of how to make money from space here.)
Superficially, they offer similar services: communications, anywhere on the planet, delivered from satellites.
Netflix featured Inmarsat prominently in its drama-mentary on MH370 (The Plane that Disappeared) and the company’s ability to track the potential paths of the lost plane after-the-fact when all other communications avenues had been severed. Inmarsat serves lots of customers like these — mobile applications where communication is mission-critical. Unfortunately for Inmarsat, you couldn't watch the documentary over its service. That's not really what its for.
In space, everything is a trade-off. Inmarsat's service is reliable anywhere under any conditions. The trade-off is that its pretty limited. You can't stream Netflix. Viasat, on the other hand, oriented its whole service around Netflix and Max and DisneyPlus and Amazon Prime Video from space — things that take a lot of bandwidth. But what if you could do both?
Inmarsat has lots of customers who need connection. They need Inmarsat's reliability, but would also pay more for additional, less reliable bandwidth as long as they didn't have to give up the part where they can tell the Navy in a storm “our ship is sinking. HELP!”
Viasat has planned a crap-ton of bandwidth — it just launched the most powerful communication satellite ever. It would love to deliver this capacity to customers instantly if they can turn the lights on. They have two more coming afterwards.
So, what do they do? Bundle. Piece together reliability anywhere, in any conditions plus you can watch MH370 documentary. In June this year, after a years-long courtship with regulators, the companies merged.
Over the coming months and quarters, the company will test the Unified Theory of Bundling and tell us whether it is one of the two ways to make money in business.
If it goes well, it will be because of this corporate recombination of a large pool of connectivity-thirsty users (Inmarsat) served by Viasat's ability to deliver bandwidth.