Here what I'm saying, June 20-27, 2010

4:42 PM

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Grabbed my posts from Twitter this week to see if I was under the influence of anything in particular. Noted that most of my good ideas weren't posted because they are secret :)

Hanging in Gloucester, MA at the "Greasey Pole" event, an annual classic

RT @alex: This is how I would fix modern schooling:

Now that's funny! - Look honey I got the new #iPhone

More on Rework by 37 Signals and the challenges of #Freemium business models

Great clips! The Smith Report » Kindle Clippings – Rework by Jason Fried & David Heinemeier Hansson

old style much better! - RT @HootSuite: Fan of old style RTs? Click the Owl > Settings > Preferences > Uncheck "Use Twitter Web retweets"

Always a good refresher - Guy Kawasaki’s 5-Point Guide to Personal Branding | Personal Branding Blog - Dan Schawbel

Sliver Businesses, I Iike that analogy - Chopping Up The Twitterverse | Get Venture

12 Reasons people 55 and older gave for being on Facebook and why they like it -

Great post! - The Stages of Innovation Acceptance

Picked up the URL figured what the heck, everyone's on the local bandwagon these days, might think of something :

Person on the T is stuffing their face with a burger while talking on the phone, funny how some people were raised :)

Ed Loessi

Pricing and Freemium models in Minimum Viable Product, Release Early, Release Often and Lean Startup

8:51 PM

(2) Comments

Ian Smith has put together another good set of ideas from one of the companies that I have followed for a number of years, 37 Signals.

The Smith Report » Kindle Clippings – Rework by Jason Fried & David Heinemeier Hansson

The one topic that I love to see debated and one that Ian highlights is - when do you need to be clear about your profit model:

#2 Clipping: Anyone who takes a “we’ll figure out how to profit in the future “ attitude to business is being ridiculous that’s like building a rocket ship but starting off by let’s pretend gravity doesn’t exist. A business without a path to profit isn’t a business it’s a hobby.

So I’m dead against freemium models, because for every Twitter there are a million failures. It’s true that a well financed VC backed business can ignore profits for a while to grab market share but they will have worked out a profit path in the not too distant future.

I think the debate gets a bit cloudy when married with the ideas of "release early and release often" popularized by Guy Kawasaki, "Minimum Viable Product" by Eric Ries and "lean Startup" in general. What I think startups struggle with is "when should I charge" not so much "should I charge" for my product.

I think most people start businesses with the intent that they will earn money, yes, it is probably urban legend that it is not necessary but I still think that most companies that actually get off the ground do in fact have a vision of how people will pay them for their product or services.

My advice centers around the following, at least in the startup phase:
  • Create a Minimum Viable Product to see if you can even build something that remotely meets your own expectations
  • Release Early and Release Often until you have enough feedback that lets you know the idea is not a pipe dream
  • Be a Lean Startup using the simplest method of payment until you get some momentum i.e. 2 pricing plans and email and social media for customer service until you are profitable
In principle I agree with Ian on the dangers of Freemium except in the case of something that is trying to be a platform. There would be no micro-blogging like Twitter if in fact it was not free. Now of course if you are offering products that help people harness the power of Twitter such as managing advertising for businesses then yes, freemium is not going to be the way to go, so make sure you know if you are the platform for delivery or a tool to work the platform as they may aid your decision on freemium versus paid and when and how to start the charging prooces.


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Ed Loessi