Revenue

Humaginarium is more moonshot than pizza delivery.

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
  • Sponsorship
  • Advertising
  • Analytics

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.

Solving for X

We’ll have nine product portfolios with dozens of nifty products.

Size is a conundrum for startups like Humaginarium. We’re born infinitesimally small with no employees, no address, no products, no customers, and no capital. Unlike most hatchlings, we don’t even have parents to foster our growth. We start with just an idea and then a panoply of ideas as immaterial as energy. Yet somehow ideas cause startups to grow. How?

Or more specifically, how fast, how large, and to what end? The answers seem irregular and obscure to me. I listen to How I Built This, the invaluable podcast hosted by Guy Raz, and every success story is more than different; it’s unique. I attend fireside chats with VCs like Ben Horowitz and haven’t caught a whiff of the secret sauce. On the other hand experts like Ron Adner, Chris Anderson, Steve Blank, Geoffrey Moore, Alex Osterwalder, Eric Ries, and Noam Wasserman have published standard methods, tools, templates, and models to explain how startups grow, but I’m still not convinced they figured it out. For one thing, many fine entrepreneurs haven’t read their books or followed their advice. For another, many like me, who did, found it’s about as useful as scripture for writing code.

Yet growth is crucial. So I’m pondering “how I’ll build this” along lines like these. Two years ago we started at an infinitesimally small Point A. We’re now advancing to a minimally viable Point B. In a few years we’ll end up at a big Point X, when we make our way to the exit.

I know what Point A looks like. It’s the company I founded named Humaginarium LLC. We’re earnestly building Point B. It’s named Diabetes Agonistes, our very first minimally viable product with at least one paying customer (hopefully more than one). I’m using the Unit Model Method to inform the design so that it’s repeatable and scalable. Because Diabetes Agonistes has to contain DNA for transforming intellectual energy into subject matter that consumers will learn with and enjoy again and again and again. Without that, it’s just a game.

Now what about Point X? As I say, I’m working on it, but I don’t care much for cookie cutters and a unit model feels a bit like one of those. Make it once, sell it many times. That’s not for me. I want to make many things once and sell each of them many times. This ambition leads me out of the neighborhood of type 2 diabetes and into the realm of chronic illness.

To my way of thinking, Humaginarium is a safe and trustworthy place where people of all stripes go to reckon with their chronic illness, and have fun with it, and practice killing it. Starting with type 2 diabetes and ending with… what?

The answer goes something like this. Diabetes Agonistes is a product. It’s going to lodge in a product portfolio. All told we’ll have nine product portfolios in Humaginarium with dozens of nifty products. The nine portfolios are:

  1. Cancerous
  2. Cardiovascular
  3. Endocrinological (home of diabetes)
  4. Hepatic
  5. Immunological
  6. Neurological
  7. Renal
  8. Respiratory
  9. Rheumatological

Have I left out any types of chronic illness? I have indeed, but I also included enough to bound what Humaginarium is, and what it isn’t. It’s very big, huge actually, but exactly the size needed to bend the curve of the #1 cause of sickness, suffering, and death in the United States and worldwide.

If you already know that half of humanity has at least one chronic illness, and if you already know that chronic illness is our #1 killer, and if you already know what each chronic illness is, and if you already know what you can do about it, then you are much farther along than millions of regular folks who may want Humaginarium because we built something they need. Therein lies Point X.

William-Adolphe_Bouguereau_Seated_Nude_(1884)

Scientific entertainment. Variation on Seated Nude, by William Bouguereau