MC Squares was paying Amazon about $2 million a year when one Excel upload corrupted the company's entire database on Amazon's side. The quick-to-market maker of direct-to-consumer office supplies was doing about $4 million in annual recurring revenue, mostly on Amazon, and starting to talk to major retailers. After the upload, the company was effectively shadow banned: its listings only surfaced when it spent loads of money on advertising. It took Anthony six months of talking to Amazon just to understand the problem and another six months to fix it. The business couldn't recover from the decline in sales.
MC Squares had plenty of products. It had one platform, and the platform is what broke.
That's the trap inside a lot of revenue that looks diversified. Morgan McBride spun Charleston Crafted into four websites by late 2024, then said Google traffic fell 96 to 99 percent across all four. Four sites, one search engine. Founders add revenue streams for safety, and those streams often share one hidden point of failure.
Platforms aren't the only place it hides. Stephanie's company did a lot of public sector work until a procurement change disqualified it as a vendor, and a huge chunk of the business fell away overnight. Her boutique consulting firm hit a different version. Direct sales kept stalling because the firm was too small, the clients were too big, and procurement got in the way. Selling through partners fixed that, and it worked well enough that eighty percent of the business ended up running through one partner. New leadership came into that partner a lot, and any new leader could decide to stop partner sales. Sometimes the contingency becomes the point of failure.
The obvious answer is to diversify, and that collides with conventional startup advice: find your niche, win one customer group in one channel, go deep. Going deep almost by definition risks leaning on a single source of revenue. Stephanie's answer depends on the stage. Early, prove the hypothesis in one or two markets. Later, widen, either into new markets, which is the harder move, or into offerings that sit next to the original one. She also diversifies by timeline, pairing an offering that takes six months to deliver with one that's quick. When it's time to sell, buyers look for exactly this: a single point of failure, or too much riding on one person or one channel.
Diversifying is also easier to recommend than to pull off. MC Squares tried Office Depot, the Container Store, other online retailers, and stationery trade shows. Nothing popped. Amazon was the only channel keeping the business alive. Anthony knew the dependency was a risk and couldn't do much about it, which is why he calls risk the game: there's no reward without pain, and you have no idea what's coming.
Stephanie pushed back on the second half. Control was never the goal. Awareness is, and newer founders may not have the experience to know where to look. Her method is plain: follow the flow of money through the business and ask at each point what could go wrong. You don't need to predict the risk to notice that eighty percent of revenue comes through one channel, or that you sit in every single process. She suggests maybe half an hour every six months. Chris calls it business planning and says you should do it quarterly: what's changed, and what's different from the original assumptions. Most of the time it's awareness, and it probably won't change anything. The point is knowing where the business would break.
When something breaks anyway, the break can expose a better model. During COVID, Stephanie worked with Pilates studios and clothing manufacturers that sold through retail stores. Some had to pivot quickly to a new way of delivering, found it worked even better, and stuck with it.
So follow your money. Find the one platform, partner, or person it all runs through, and decide now what you'd do if it disappeared tomorrow.
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