Two Markets, Two Models
The HBR case of Scherr Pharmaceuticals highlights a merger that looks like it works on paper but becomes messy in practice. Siiquent, under Isolde, catered to hospitals and diagnostic labs and was described as a razor-blade model. They provide instruments at cost and profit from consumables like reagents and test kits. Teomik, led by Emanuel, sold premium machines to research institutions and didn’t pay as much attention to the consumables. Each model worked well for its respective market as hospitals valued efficiency and compliance, while labs prized cutting-edge equipment and prestige.
Obviously this created questions surrounding if the combined entity should impose one unified model for clarity, or preserve their flexibility. A single structure promises consistency but risks failing to accommodate the complexity of real markets. Two models encourage responsiveness but bring confusion, inefficiency, and even moral hazards (as seen with Siiquent’s pay-per-test waste).
Applying Personal Lessons
The question reminded me of my internship with Battery Capital Partners, where I helped out at a plumbing company called Blue Collars. The company was a little over a year old and was still determining its own main revenue model, deciding between high-volume, transactional residential jobs and stable, contract-driven commercial services. Since I worked closely with the CEO, I actually had decent insight into his thoughts as he compared contracts offering predictability and one-off jobs offering growth and low CAC.
This experience gave me a real world example of the importance of success metrics. The company had no shared language to evaluate the tradeoffs at this time, and this is exactly what the CEO created first. Without clear measures of success, arguments stayed stuck in preference. This leads me to believe Siiquent and Teomik should be attempting to do the same thing. Multiple models can coexist, but only if leaders define how success will be judged, commit to what best improves such success metrics, and gives multiple viable options their fair chance.
Success Metrics and Key Results
Reminding me of this lesson in the first place, our most recent class discussion on success metrics and key results comes in. Rather than debating structure in the abstract, I think the better approach is to anchor in outcomes. Success metrics turn vague goals into measurable signals like retention rates, margin stability, customer satisfaction and key results sharpen them into before and after states. If I were the PM mediating Isolde and Emanuel’s merger discussions, I’d scaffold the process around this framework. First, align on the overarching success metrics that define “winning.” Then, let each side bring evidence of how their model performs against those metrics currently. Finally, test the possible single model approaches with clear key results to track whether the original or a new model creates the most value.
My Conclusion
Revenue models are more than just financial tools. They’re lenses for how a company sees its customers. Neither Siiquent nor Teomik was right or wrong. They each had adapted to their market in a way that fit. The challenge is not whether two models can exist side by side, but whether leaders can discipline themselves to judge models by success metrics and key results rather than gut instinct and what they are used to.
