When it comes to revenue, consider two types of startup. One wants to solve problems and also make money. The other wants to make money and also solve problems. They sound alike but their raison d’être is different. I thought I observed the difference in a series of pitches this week. Problem-solvers edified and inspired me whereas money-makers pressed for my buy in. Hopefully I’m not making this up. I think it’s real. The difference between the types of startup is like the difference between quality and utility, transformation and fulfillment, moonshot and pizza delivery.
Be that as it may, all startups have to spend and make money, the more the better. For their innovations to engage, they must scale so that they solve one huge problem for many different customers or a lot of little problems for just a few customers at a time. AAA game studios are examples of huge; indie studios of little. Ideally and rarely, when innovations solve a lot of huge problems for many different customers, brands like Amazon and Google are born. Humaginarium may be that kind of startup.
It’s a nice thought, but in any case where will our revenue come from? Most likely from multiple streams including:
- Direct sales
With a freemium pricing strategy, direct sales to consumers will occur when uncommitted users become paying customers. Why would they do that? In order to unlock extra content and premium services. Freemium will help Humaginarium build a large fan base by removing piddling barriers to entry. True, only a small portion of users will actually become paying customers, but the value of scale to us far exceeds the value of purchases alone. Strange as it sounded before Chris Anderson explained this for me, free is far more lucrative than subscription or PPV.
In addition to consumers, we will also book revenue with direct sales to organizations that hire Humaginarium. Hire us? For what? Most likely to develop branded content for their customers, members, students, or employees. This contracted work for hire will be vended by a sub brand named Humagine Learning. That brand draws from the same creative and technical resources as Humaginarium, but makes different products. Organizations get to own what they buy from Humagine Learning, and they also get to decide what it is and whom it’s for.
Our work for hire is a kind of “sponsored content,” but not the only kind. Content we make for direct sale to consumers can also be sponsored. For example, by nonprofits making program-related investments in health literacy or by for-profits trying to build their brands with a large audience of our consumers who have the problem that our sponsor claims to solve. In this way, the Cleveland Clinic could decide to sponsor our cardiovascular portfolio because it promotes health literacy in a segment of the population that the Cleveland Clinic famously serves.
Advertising is yet another revenue stream, different from sponsorship because ad sales are specifically for demand generation rather than brand building. Thus a pharmaceutical or food processing company might decide to advertise to consumers playing in our immunological portfolio. Why? Because the advertiser has a specific product that mitigates a chronic illness that we are helping consumers understand and maybe do something about.
Analytics is different from the previous streams but also valuable. Consumers who explore and challenge chronic illness in Humaginarium may generate mass insight into behaviors, beliefs, preferences, habits, and concerns that transcend play and factor into real-life choices. We will sell this insight to customers in health care and population health who can use it. For example, insight into complex emotional causes of medication non adherence for marketers of drugs.
These multiple revenue streams are organic to the value propositions of Humaginarium. They all represent transactions that reinforce our nudge to wellness. Unlike Walgreens selling liquor and tobacco products in their pharmacies, they fit our mission. Am I sure that there’s enough revenue in these combined streams to warrant investment in the highest quality scientific entertainment that I have in mind? I won’t know for sure until I have a financial model that presents the data and passes the test. However I’m pretty sure that Humaginarium is more moonshot than pizza delivery. The upside potential looks incredible.