Thursday, November 13, 2014

The trick with the freemium model

Fred Wilson wrote a blog post this morning titled, “The First Law of Internet Physics”. There is a strong chance you've already read it anyhow.
If you haven't, it's one of those axiomatic reads that can get your mind fired up.
I love it when I read something that seems to hit on a universal truth and my mental faculties just start racing up.
It’s like revving a fun car.
What I found even more intriguing, however, was a comment on Fred's blog that to a degree mirrored my own thoughts.
It said: “The trick with freemium is knowing how much (or what parts) of your inventory (be it software, music, or media content) to give away for free.”
That stirred my thinking along a certain line.
More specifically I would say it helped me come up with this little construct: the adjudication of what gets included and excluded in a particular freemium offering needs to be made from the point of view of the user who wants the free offering, and in such as way so as to make her happy — elated actually, and certainly not frustrated — all the while finding the right triggers that will make her feel she needs to upgrade to the paid offering without feeling she has been manipulated or coerced. She needs to feel it is in her best interests to get the additional (paid for) experience.
I mean every single word in the underlined text above.
I have enough experience already as a product manager, and as a website user, more importantly, to viscerally know the above to to be true.
I will personally keep this in mind moving forward; and if my little "reflection" here can be of use to someone else, then I’ll consider that to be a boon.

A humble beginning for a lofty ambition

Last evening we held the first meetup.
There were two of us. That’s right — two. Myself and a gentleman called Glen.
I nonetheless consider it a success.
For one thing, the food was great, and we had an interesting conversation about our mutual philosophies and our individual takes about technology, innovation and entrepreneurship.
Glen is a veteran of the tech industry with a rich experience.
We both see eye-to-eye regarding the ideology of our Meetup group, The Toronto Entrepreneurial Ecosystem.
Let me state what that is: we are fostering a tight-knit and supportive startup community in Toronto based on the idea of giving-before-getting.
A lot can be done to make the tech scene very special here in Toronto, and that largely consists of caring about it and contributing to it. In other words, what’s needed, in my opinion, is the opposite of “looking out for number one” and “what’s in it for me?”
A least now there is a small nucleus from which we can grow this thing.
Glen and I shall both talk to other people about the group.
And it will be great to gradually have more people join us.
So I encourage everyone to decide to take some part in making the Toronto startup community really bond together — even if you'd end up not joining our particular endeavor.
(Perhaps you’re doing that already, and to a much higher level than I am even. If that’s the case, please reach out to me so I know who you are. If nothing else, it'll minimally make for an interesting communication exchange.)
All it takes is a “why not” attitude and a mindset to get involved without expecting nothing specific or concrete in return. Karma will take care of that.
Building such a community is a long term effort. It doesn’t have to start with a bang — if members who truly share the ethos get added bit by bit over time, the results will be pretty dramatic.
And this effort is not just about the meetups themselves. It is about fostering a vibrant group which will subsequently communicate using multiple channels to stay connected.

Sunday, November 9, 2014

Using crowdfunding as a community-building tool

Fred Wilson wrote a blog post a few hours ago about the “all or nothing” vs “keep what you raise” crowdfunding models in which he describes the latter as lame and convincingly explains why. I urge you to read the post in the unlikely event you haven’t already.
I thought about it for a few minutes and agreed on all counts with Fred’s wisdom in the context in which he’s discussing the issue, namely for a venture raising money and essentially being subject to the same market dynamics that apply to all traditional fundraising channels.
But my mind immediately started to race in other directions, considering alternate views, and I can envision a use case in which crowdfunding could become a community-building tool in our society.
Currently, crowdfunding is largely popular for bringing hardware products to market.
But there are other motivations that can come — and are already coming — into play as well.
We can use crowdfunding, not only for charity, as for example Razoo and Causes are doing, but also as a platform to give the underdog, among others, a sense of belonging to the community.
Examples of this are / would be:
  1. 1. Someone who is undergoing rehabilitation of some kind, either from a medical condition, from an accident, a life of crime or drugs, to raise money for building something of worth.
  2. 2. The elderly who could be given a sense of purpose as well as a stream of revenue from also building something of worth.
  3. 3. Children with an entrepreneurial streak could be given an avenue by which to get started.
  4. 4. Even the homeless can be helped through crowdfunding.
Each scenario would need to be evaluated separately and safeguards put in place as required, it goes without saying, but the social impact could be enormous.
I pointed out to Fred, in the comment section of his blog, that in the event where the motivations of the backers are something other than helping getting a business off the ground in the purely transactional sense, it matters less which of the two above-mentioned crowdfunding model is used.
He concurred and modified his post to include an exclusion for charity use cases.

Tuesday, November 4, 2014

Is being an entrepreneur the same as being a business owner?

Let’s say someone has been thinking about doing a startup and is finally getting going, does that make her an entrepreneur yet? What if she has experience as a business owner? Does that count?
Well, here are a few definitions:
StartupA company that is in the first stage of its operations. These companies are often initially bank rolled by their entrepreneurial founders as they attempt to capitalize on developing a product or service for which they believe there is a demand. Due to limited revenue or high costs, most of these small scale operations are not sustainable in the long term without additional funding from venture capitalists.
Here is an even better definition, in my opinion: In the world of business, the word “startup” goes beyond a company just getting off the ground. The term startup is also associated with a business that is typically technology oriented and has high growth potential. Startups have some unique struggles, especially in regard to financing. That’s because investors are looking for the highest potential return on investment, while balancing the associated risks.
Lastly, I find Dave McClure’s definition awesome:
A ‘startup’ is a company that is confused about —
  1. What its product is.
  2. Who its customers are.
  3. How to make money.
  4. As soon as it figures out all 3 things, it ceases being a startup and becomes a real business.
Except most times, that doesn’t happen.”
1) EntrepreneurA person who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so.
2) Entrepreneurship is the pursuit of opportunity without regard to resources currently controlled.
Business ownerAn individual who owns and operates a business whether it be small or large. This individual also profits from the net gain of the company.
As you can see, there is a difference between a business owner and an entrepreneur, and that difference is largely high growth and risk factors.
There is also a difference, obviously, between an entrepreneur and an aspiring entrepreneur.
My personal approach has been to first appoint myself as a startup founder and simply get going somehow.
Then the plan is to gradually and systematically keep progressing from being an aspiring to being a bona fide entrepreneur.
I have been a business owner for over 26 years, but that doesn’t make me into an entrepreneur.
There is a difference — a big difference.
As I keep studying the venture capital industry, I notice that VCs see definite distinctions within entrepreneurship itself as well: a first-time entrepreneur is a far cry from a second or third time entrepreneur to them.
Let’s not fool ourselves, let’s be prepared.