April 2025
Some of the most successful startups in recent years have followed a simple but powerful strategy: taking a small feature from an industry giant, refining it, and turning it into an entire business. This approach, known as "unbundling," allows smaller, more agile companies to carve out profitable niches while challenging the dominance of big brands.
Large platforms like Facebook, Google, and Amazon offer a wide range of features, often packing multiple tools and functionalities into a single ecosystem. While this provides convenience, it also creates inefficiencies. Many users only need a fraction of what these platforms offer, yet they are forced to navigate cluttered interfaces and unnecessary complexities. Startups that recognize this problem take a single feature from these platforms and turn it into a standalone, highly optimized product. This approach allows them to refine the user experience and often create a business that is more effective and valuable than the original bundled solution.
Substack is a perfect example of unbundling in action. Blogging platforms like Medium and WordPress provided a space for writers to publish, but they lacked a direct monetization model. Substack took one core element—the ability to write and distribute content—and combined it with a seamless subscription model. By simplifying the publishing process and allowing writers to build their own audience without worrying about algorithms or ads, Substack unlocked a massive new market for independent creators.
Unbundling succeeds because large platforms tend to prioritize scale over specialization. When companies attempt to serve too many needs at once, they dilute the quality of individual features. Startups that focus on one feature can refine it, improve it, and create a superior experience. This level of specialization is nearly impossible for large companies that are spread too thin across multiple functions.
User frustration also plays a significant role in the success of unbundling. Many people dislike bloated platforms that are difficult to navigate, slow to load, or filled with distractions. By offering a focused alternative, startups can attract users who are looking for a simpler, more effective solution. This is why Slack was able to disrupt email for workplace communication. Email was designed for all types of correspondence, but Slack took just one element—team communication—and created a more efficient, real-time messaging experience.
Another reason unbundling is so effective is that it opens up new monetization opportunities. When a feature is hidden inside a larger platform, it often lacks a clear revenue model. A startup that extracts and refines that feature can introduce premium pricing, subscriptions, or pay-per-use models. This is exactly what Shopify did with e-commerce. Instead of competing with Amazon’s vast marketplace, Shopify provided merchants with the ability to create their own online stores. This gave businesses full control over branding, pricing, and customer relationships, which wasn’t possible within Amazon’s ecosystem.
Substack unbundled the blogging experience from platforms like Medium by focusing solely on paid newsletters. Slack unbundled workplace communication from traditional email, making real-time collaboration smoother. Shopify unbundled e-commerce from Amazon’s marketplace by giving merchants a way to create their own independent stores. Robinhood unbundled stock trading from traditional brokerage firms by introducing commission-free trading and an easy-to-use mobile app.
Each of these companies identified a single feature that users needed, refined it, and built a business around it. They did not attempt to replace the entire industry but rather took one core function and executed it better than the incumbents.
Finding opportunities for unbundling starts with analyzing large platforms and identifying the most-used features. Every big platform has certain tools that users rely on more than others. By studying these platforms, entrepreneurs can spot areas where a standalone product might outperform the bundled solution.
Understanding user frustration is key. Common pain points, such as cluttered interfaces, unnecessary complexity, or lack of customization, often signal an opportunity for unbundling. People are constantly looking for simpler and more effective ways to accomplish their goals. Startups that provide an easier, more focused solution often attract a loyal customer base quickly.
Monetization potential is another critical factor. Not every feature can be turned into a profitable business. Entrepreneurs need to assess whether users would be willing to pay for a standalone version of the feature. Subscription models, one-time purchases, and tiered pricing structures can all be used to create a sustainable business.
Building a focused MVP is the final step in testing an unbundling opportunity. Instead of replicating an entire platform, startups should focus on perfecting the unbundled feature first. A minimal viable product that does one thing exceptionally well will gain traction faster and allow for quicker iteration based on user feedback.
Unbundling is a powerful strategy that allows startups to create focused, high-quality products by extracting and refining individual features from massive platforms. By improving the user experience, eliminating complexity, and introducing better monetization models, startups can carve out profitable niches and challenge industry giants. With so many bloated platforms still dominating various industries, the opportunities for unbundling are vast and continue to grow.
