Revenue Distribution Across 18 Business Lines: Where $868K Went

The Setup

Revenue diversification is one of the most scrutinized metrics in PE portfolio evaluation. A single business line representing more than 30% of total revenue triggers concentration flags. Multiple business lines at zero revenue raise questions about capital allocation discipline. The tension between diversification and focus is the core portfolio construction challenge — and most operators resolve it with narrative rather than data.

According to Bain & Company's 2024 Private Equity Report, portfolio companies with revenue concentrated in fewer than three business lines underperform diversified peers by 15-20% on hold-period returns, primarily due to downside events in the dominant line. Conversely, PitchBook's 2024 analysis of middle-market PE exits found that companies with more than 10 business lines at sub-scale often trade at discounts due to management complexity concerns. The optimal range — enough diversification to absorb shocks, enough focus to scale winners — is what separates top-quartile portfolio companies.

The Stealth Labz operation, run by Michael George Keating, deployed $868,147 in net revenue across 18 distinct business lines over 28 months (February 2024 through January 2026). The distribution reveals both the concentration reality and the infrastructure optionality that PE evaluators rarely see in a single dataset.

What the Data Shows

Of the 18 business lines in the portfolio, 6 generated meaningful revenue. The remaining 12 are pre-revenue systems — built, deployed, and operational, but not yet generating cash flow. This is not a failure of the 12. It is the portfolio construction model operating as designed: infrastructure built during low-cost windows, ready for revenue activation when market conditions or traffic sources align.

The revenue distribution across the six active business lines:

Business Line	Net Revenue	% of Total	Gross Margin
PRJ-12	$652,495	75.2%	-5.9%
PRJ-13	$113,009	13.0%	5.4%
PRJ-16	$48,342	5.6%	74.8%
PRJ-05	$29,686	3.4%	23.0%
PRJ-14	$14,419	1.7%	39.6%
PRJ-15	$10,197	1.2%	37.4%
Total	$868,147	100%	2.3%

The concentration is stark: PRJ-12 alone represents 75.2% of total net revenue. PRJ-12 plus PRJ-13 account for 88.2%. This is a heavily concentrated portfolio by any PE standard. But the margin structure tells a different story than the revenue distribution alone.

PRJ-12 generated the most revenue ($652K) at negative gross margins (-5.9%) — affiliate payout costs exceeded the revenue they generated in some months. PRJ-16, generating only 5.6% of revenue ($48K), carried a 74.8% gross margin. PRJ-14 and PRJ-15, at 1.7% and 1.2% of revenue respectively, both operated above 37% gross margins. The highest-revenue line was the least profitable. The smallest revenue lines were the most profitable per dollar.

According to a 2023 McKinsey analysis of DTC portfolio economics, this pattern — high-volume/low-margin channels subsidizing the discovery of high-margin/low-volume channels — is typical of businesses transitioning from affiliate-driven to owned-traffic models. The value is not in the current distribution. The value is in the margin trajectory as the business shifts volume toward its higher-margin lines.

The 12 pre-revenue systems — PRJ-01, PRJ-17, PRJ-18, PRJ-19, PRJ-08, PRJ-09, PRJ-10, PRJ-11, PRJ-06, PRJ-07, PRJ-04, PRJ-03 — represent a different kind of portfolio asset. They are not generating cash flow, but they are built, deployed, and operational. Total build cost across all 18 systems (revenue-generating and pre-revenue): $65,394 (QB-verified). Market replacement cost: $1.4M to $2.9M. The pre-revenue systems are optionality — infrastructure that can be activated at near-zero marginal cost when market conditions warrant.

How It Works

The 18-business-line structure is not the result of unfocused capital allocation. It is the product of a shared infrastructure model where the marginal cost of launching a new business line approaches zero once the core stack is built.

All six revenue-generating lines and all twelve pre-revenue systems run on shared infrastructure — the same Konnektive CRM (for applicable lines), the same payment processing, the same PRJ-01 platform for data management and operational control. PRJ-01 alone (194,954 lines of code, 1,394 commits) replaced $19,909 in annual SaaS vendor costs and eliminated all external contractor dependencies. The operating cost trajectory reflects this: monthly operating costs fell from $8,367 in September 2025 to approximately $825 by February 2026 — a 90% reduction.

The revenue distribution also tells the story of traffic source evolution. PRJ-12's $652K in revenue was predominantly affiliate-driven (AFF-01: $185,095 in payouts; AFF-02: $61,255; AFF-03: $13,740). PRJ-16's $48K came through a different affiliate model (AFF-09: $8,987 in payouts). PRJ-05 operated across geographies with ZAR-denominated revenue through AFF-10 ($14,194 in payouts). Each business line represents not just a revenue stream but a distinct traffic and monetization model tested on shared infrastructure.

What This Means for Decision-Makers

The $868K revenue distribution across 18 business lines presents a portfolio that is concentrated in revenue but diversified in infrastructure optionality. A PE evaluator looking only at the revenue concentration (75.2% in PRJ-12) sees risk. An evaluator looking at the margin structure (PRJ-12 at -5.9% vs. PRJ-16 at 74.8%) sees a transition in progress. An evaluator looking at the 12 pre-revenue systems built at $65,394 total sees unrealized optionality valued at 22-44x build cost on a replacement basis.

The question for decision-makers is not "why is 75% of revenue in one business line?" It is "what is the marginal cost of shifting volume toward the 37-75% margin lines, and what is the activation cost of the 12 pre-revenue systems?" In this operation, both answers are approximately the same: near zero, because the infrastructure is already built and the operating cost is $825/month. That is a different portfolio than the revenue concentration alone suggests.

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Related: [C7_S148 — 28 Months of P&L Data] | [C7_S151 — 38 Products Tested, 6 Scaled] | [C7_S153 — The 97.7% COGS Problem]

References

1. Bain & Company (2024). "Global Private Equity Report." Revenue concentration thresholds and hold-period return differentials for diversified versus concentrated portfolios.
2. PitchBook (2024). "Middle-Market PE Exit Analysis." Valuation discounts for over-diversified business line structures and management complexity concerns.
3. McKinsey & Company (2023). "DTC Portfolio Economics." High-volume/low-margin to owned-traffic transition patterns in direct-to-consumer businesses.
4. Keating, M.G. (2026). "The Compounding Execution Method: Complete Technical Documentation." Stealth Labz. Browse papers