1/ "In [financial services], there are two ways to make money. You can bundle, or you can unbundle.” Jim Barksdale https://www.google.com/amp/s/www.barrons.com/amp/articles/schwab-ends-trading-commissions-and-online-brokerage-stocks-tank-51569940202 … The purpose of the unbundle part of the strategy is to acquire customers in a cost effective way. Lower CAC first, then cross-sell later.
2/ "The unique advantage of a software-based business model is the marginal cost of providing an additional unit of the service approaches $0. Another advantage of unbundle/re-bundle is the service can be built from the ground up to be simple to use." https://www.google.com/amp/s/25iq.com/2018/03/31/friar-tuck-financial-services-a-classic-unbundle-re-bundle-strategy/amp/ …
3/ Best free services:
* have low variable COGs.
* are viral
* create network effects
* result in customers registering
* are sticky
* complementary services exist to cross-sell that customers are accustomed to paying real money for. People hate paying for formerly free services.
4/ Any business with a high cost of customer acquisition (e.g. financial services) will continue searching for new services to give away to create the opportunity to cross sell other services. Content marketing in fintech is another example of a loss leader used to lower CAC.
5/ Bill Gurley: "If a disruptive competitor can offer a product or service similar to yours for 'free,' and if they can make enough money to keep the lights on, then you likely have a problem.“
The competition is limited eventually by cash. Timing "eventually" is a hard problem.
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