Many well-known consumer service startups have begun supplementing their core businesses with secondary revenue streams.
Why it matters: After lukewarm investor reception to IPOs by Uber and Lyft, there’s increased pressure to find paths to profitability.
On-demand delivery companies, whose business model is most similar to ride-hail because of slim margins and human labor costs, have been drawing additional revenue in several different says.
- Grocery delivery service Instacart gets paid to promote select packaged goods to consumers.
- Meal delivery companies Postmates and DoorDash offer a range of services to restaurants, from order management software to a white-label delivery fulfillment service to merchants like Apple and Chipotle.
WeWork, best known for its flexible office rentals, sells office design and management services to companies that want to import the WeWork brand and experience without physically uprooting.
- The company also is experimenting with such things as an elementary school and apartment building with flexible leases.
Airbnb is going with a more direct adjacency: Hotel bookings.
- The company has long had an adversarial relationship with hoteliers but, after years of quietly allowing some professionally managed vacation rentals on its marketplace, Airbnb has gone all in with the recent purchase of HotelTonight and foray into operating some itself.
- It’s also streamlining its fees to hotels to compete with travel booking sites and lets travelers book activities organized by local home-share hosts.
SoFi, which for years was best known for refinancing student loans, has recently launched new businesses like deposits and robo-advising.
The bottom line: Few of these initiatives will rival the core business, but might give future investors more comfort that growth needn't come at the indefinite expense of profit.
