Siiquent is a DNA sequencing startup that sells everything that hospitals and labs need for gene-based diagnosis. Teomik focuses on genetic research labs, selling all of the research equipment needed for gene-based studies. Both companies offer customized training and comprehensive support from professionals. However, Siiquent generates its revenue from selling the supplies needed for for their sequencing machines, whereas Teomik generates revenue from selling their actual research equipment.
Their revenue models diverged because Siiquent found its gene-based diagnosis technology to be “too costly for all but Germany’s biggest hospitals and diagnostic labs”, and even then, the most financially sound institutions always vetoed any proposed Siiquent purchases. When Siiquent realized that they can’t profit from selling their test instruments, they focused on selling consumables such as test kits, biological/chemical compounds, and other things necessary for gene-based diagnosis — just not the machines themselves. On the other hand, the “big funders of genetic research” that Teomik targets don’t bat an eye at high instrument prices, which meant Teomik was able to profit from its machines.
Peter Noll wanted to impose a single revenue model on both companies for a multitude of reasons. By using a single revenue model, he could consolidate the sales forces and operations, which would in turn reduce the overall cost. A single, established revenue model also helps the business select customers or fight a competitive landscape, whereas multiple companies can currently “take aim” at each business unit’s market. Furthermore, sharing the same revenue model means that each business unit won’t be “stealing” customers from the other.
However, Isole and Emanuel point out that their strategy has always been to respond to the market; a single revenue model would restrict their ability to do so. Especially because Teomik and Siiquent have always targeted different customers in the gene industry, imposing one revenue model onto both business units means losing sight of one portion of customers and their pain points. Siiquent and Teomik have succeeded because of their flexibility and adaptability — things that may not be possible if they are under the same revenue model.
To scaffold the discussion and ensure a fair merging process, I would repeat the same process as Peter Noll: speak with both the heads of Teomik and Siiquent, and hear about/understand their respective revenue models in their own words. Teomik, Siiquent, and I would have a conversation about all of the core similarities and differences between each company and their revenue models, as well as why they think they are currently succeeding + how they think they would perform under the other’s (or an entirely different) revenue model. After these discussions with Teomik and Siiquent, I would then turn to the user research team to focus on each company’s customers, the general market space, and their needs. What percentage of Teomik’s customers would stop having their crucial needs and extra desires met if Teomik’s revenue model changed? (And vice versa with Siiquent.) The heads of Teomik and Siiquent will continue to be a part of this process, so they can get a stronger sense of the implications of a potential revenue model change and continue discussing the pros/cons of imposing a single revenue model or not.
