Free is just free of charge

alarm clockIn 1995, there was a period of time when I was so broke that I couldn’t afford to pay anything for anything. In those three weeks, I was desperate to find all the things you could do for free. There was hardly anything. There was TV, radio, the public library, galleries, and museums. Obviously you could walk through the city and the countryside. I think that was pretty much it.

Fast forward to today. Thanks to the Internet, I now have access to a huge variety of free services. Actually, the variety is not just huge, it is incredibly huge. And most of it is totally free. The major reason for this is that the Internet has made product distribution so cheap that companies can afford to give products away for free. People like Josh Kopelman have pointed out before that there is a huge difference between getting somebody to use something that costs $0 and $0.01. This is true. In a sense, you could say that the vast majority of newly launched online products are free these days. Personally, I ignore those that aren’t.

However, I find that I am now so inundated with free stuff that I don’t even find the time to check all these things out anymore, even when they are free. What this means is that these things don’t compete for my money anymore, they compete for my time.

So what I have realized is that these products are not free. They are just free of charge. But they cost me something: my time.

Thinking about it, time is the most important thing I have. After all, this is my life we are talking about here. Money, well, if you have it, money is just money. I will happily pay a fair amount of money for things that save me a great deal of time.

I think this has two implications. First, free products these days are not just competing for attention, but they are competing for time, or face time if you will. This has some pretty important implications for web start-ups, by the way. Second, I think users are realizing that they can do a lot of useful stuff with all these products, but they really don’t have the time to do it. I think this is giving rise to a number of paid-for services that help people save time or make things far more convenient for them.

A great example of this is TiVo. You essentially pay for viewing recorded free programs at a time you choose and without having to waste your time on adverts. Another example is toll roads. You can take the free road, it will take you forever. You pay for the toll road, because it saves you time and hassle. A specific software example would be Carbonite, the automatic back-up service. You don’t need to worry about and spending time on backing up data anymore; it just does it for you. Another example is skype. I use it free – a lot. But sometimes it is just awfully convenient to be able to skype-out somebody into a conference call, happy to pay for that.

So, my view has shifted. The standard, I now expect free of charge. (Well, with software and online services at least) But I am more than happy to pay for things that will save me time and make my life easier by offering me things that I couldn’t do before.

So, today, being broke doesn’t mean being bored. It just means being stressed. Amazing.

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Market entry strategy

Startup ReviewThere is a very interesting blog that reviews the history of successful start-up companies. Unsurprisingly, the blog is called Start-up Review. The blog is edited by Nisan Gabbay and friends. So far they have reviewed some 30 start-ups, using a consistent format for describing the successful journey of these companies. They do some in-depth research, including interviews with founders, management and staff. Companies covered include both homeruns like Facebook and boot-strapped successes such as HOTorNOT.

When reading through these company case studies, I noticed that certain themes around marketing and market entry seemed to resurface consistently. The same elements, while not present in every company, appeared over and over again in different combinations. In other words: a pattern seemed to emerge.

I spend a short time categorising the marketing and market entry strategies of the companies. The resultant effort is shown below. Please note that my analysis is based on the case studies, I am convinced that it is incomplete and it may also be inaccurate. What is more interesting than the individual companies is the pattern itself.

Startup Analysis

Click on the picture for a larger version.

It is probably worth noting that the absence of a control group of unsuccessful companies limits the usefulness of this analysis. For example, it is possible that unsuccessful companies deployed the same marketing strategies at market entry and failed. Nonetheless, it is interesting to see that certain types of market entry and marketing strategies are used by several of the successful companies.

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