May 31, 2019

Profit-seeking "unicorns" turn to side hustles

Illustration of a unicorn in water wearing a circle floating tube.

Illustration: Aïda Amer/Axios

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.

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.

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