Today, we are trying a special edition of Founder Stories; that we are calling Founder Office Hours. Inspired by Paul Graham’s Office Hours onstage at our last Techcrunch Disrupt, we brought together a group of startup founders in our NYC studio to get feedback and advice. Joining regular host Chris Dixon is Josh Kopelman, managing partner of First Round Capital.
In this first video above, Adam Neary, founder of Profitably, asks whether he should charge for a new product or go freemium. Profitably is a business dashboard for small businesses that pulls accounting data from QuickBooks and helps visualize it. The company is developing a new product around business planning and modeling that traditionally is only available to larger corporations. Should he charge a monthly fee for the new product, or go freemium—give it away for free and upsell to premium features?
It depends on what his immediate goals are: getting big or getting profitable. “Customer acquisition for small- to mid-sized businesses is the hardest thing,” notes Kopelman. “You have to market to them as consumers.” If the product has broad appeal, you can consider giving it away for free as a way to subsidize the cost of acquiring new customers. But you need to have something to upsell. “You don’t want to have too much free and not enough -emium,” he says.
What about building a white-label version for a large customers as a way to hit quarterly targets? Both Dixon and Kopelman agree that if Neary wants to raise more money down the line, investors are more likely to put a higher value the business if it has a direct relationship with the end customer.
Watch previous Founder Stories here.