The Two-Goal Vertical Expansion Test
Add adjacent services only when they improve experience and revenue
- Difficulty
- Moderate
- Time to result
- ~months to results
- Steps
- 5
- Confidence
- 94%
Roger Moore treats title and insurance as vertical extensions of his mortgage company rather than diversification. His test begins with an existing customer need: borrowers already require title work and insurance. The addition must then accomplish two goals at once—make the client's experience easier and create more company revenue. Execution depends on finding a specialist partner, assigning capable people, and using outside infrastructure where appropriate rather than building every capability alone. The final gate is founder focus. Moore was interested because these services strengthened the mortgage company without pulling him away from his primary role. An adjacent idea that lacks the people to run it or consumes attention needed by the core business fails the test.
Origin
Moore explains that Loan Pronto added title and insurance through partnerships because both services sit directly beside a mortgage transaction.
Core principles
- 01Expand within the core business lane
- 02Require both customer and revenue benefits
- 03Use capable partners to carry specialist work
- 04Reject additions that distract from the primary company
How to run it
- 1
Start from the core transaction
List the services customers must obtain before, during, or after the company's main transaction. Stay within the business lane instead of chasing an unrelated opportunity.
Pro tip Look for a service that is already unavoidable for nearly every customer.
Watch out Do not call an unrelated venture a vertical merely because it could make money.
- 2
Test the customer benefit
Determine whether bringing the adjacent service closer makes the customer's experience easier or more seamless.
Pro tip Describe the exact handoff or friction the vertical removes.
Watch out Convenience must be real for the customer, not just for the owner.
- 3
Test the revenue benefit
Confirm that the vertical can add revenue to the core company while serving the same customer relationship.
Pro tip Evaluate customer and revenue benefits together rather than accepting only one.
Watch out Extra revenue does not justify damaging the main client experience.
- 4
Secure operating capacity
Find a knowledgeable partner and the employees needed to launch and operate the service. Use an established parent or provider to carry specialist burdens where possible.
Pro tip Moore bought into an existing insurance company rather than launching alone.
Watch out A good idea without the people to execute it can still fail.
- 5
Protect the primary role
Check whether the vertical strengthens the core company without taking the founder away from building it. Reject or redesign the addition if it becomes a competing priority.
Pro tip Keep the founder focused on the activity that made the core business work.
Watch out Shiny-object expansion can dilute the company even when the adjacent market is attractive.
In the wild
Loan Pronto's mortgage customers already needed title services and an insurance policy. Moore formed joint ventures with people he knew, moved employees from the mortgage team into the two verticals, and relied on Fidelity and an insurance parent company for part of the specialist load. The services improved continuity for borrowers while creating additional revenue without moving Moore outside mortgages.
→ The company added two adjacent revenue streams while preserving focus on the mortgage operation.
Moore contrasts the successful verticals with Home Pronto, a real-estate company he says failed because he could not find the manpower to operate it. The idea alone did not overcome the absence of people who could execute it.
→ The failed launch illustrates why operating capacity is a required gate.
Common mistakes
Chasing an unrelated shiny object
Moving outside the core lane can consume the attention needed to improve the primary company.
Launching without operators
An attractive adjacent service still fails when nobody has the capacity or expertise to run it.
Optimising for revenue alone
The vertical must also improve the customer experience rather than merely extracting more value.
Is it for you?
Best for
It is best for established service businesses considering an adjacent service their customers already buy.
Not ideal for
It is not ideal for unrelated opportunities that depend on the founder leaving the company's core lane.
From the transcript
“these two verticals were a way to accomplish two goals one make my client experience a little better and create more revenue for the company”
“primary role which was building a great mortgage company anything that took me away from that I wasn't interested in”
“you can have the best idea in the world but if you don't have the people to do it it will fail”
From the episode
Less is More with Roger Moore