Why it’s important for startups to diversify their business model

Last week, two of Australia’s hottest startups were in the press for all of the wrong reasons.

Independent tech company Unlockd ‘fell from grace’ after losing their battle with Google. The app, which allows users to reduce their phone plans by viewing advertising, was accused of being in breach of their terms of use. Failure to clean up their act meant that Google removed the app from the Google Play Store (their only marketplace) and denied them access to its AdMob advertising server. Despite their efforts to recover, this proved a fatal blow and Unlockd entered voluntary administration, claiming they were left with ‘no choice’.

Elsewhere in fintech, Westpac called time on their referral relationship with Sydney-based startup Prospa. The bank admitted their development of competing products was one of the reasons they ended the collaboration, which had been sending business Propsa’s way since 2015.

The news broke just days after Prospa abandoned their much-anticipated plans to list on the ASX with just 15 minutes to spare. A query on small business lending contract terms by corporate regulator, ASIC, was blamed for temporary, then indefinite, delay.

While there is likely more detail to come on both of these cases, the failures share a common theme. They both built a business model reliant on a single, external force which ultimately left them vulnerable. Read more

Aaron Brooks - Startup Daily - 22 June 2018