Business Software and the Freemium Business Model

As a previous post indicates, I am a fan of the freemium business model and I believe it is an customer acquisition strategy worth considering for start-ups, not just in the Web consumer services world but even for those developing business software. Yesterday, however, I had an epiphany in terms of what type of business software offerings it may -- or may not -- be suited for.

Until yesterday, I was of the mindset that the freemium business model could be applied to most business software offerings and it was a matter of coming up with the right packaging to determine which features should be offered for free and which should be offered as premium, for-pay features. I am now of a different mindset.

In the business software world, I think the freemium business model is ideal for the following use cases:

• Offerings that are targeted at an individual and where no organizational decision making is required to decide whether to use the offering or not. LinkedIn is a good example of this.
• Offerings that involve small workgroups and where its initial usage is not part of a business-critical workflow (i.e., its usage does not require high-level authorization within an organization). Wikis, I believe, are a good example of this type of offering. Within organizations, wikis can initially be used by small groups of people for purposes that are not business critical.

Perhaps more importantly, I think the freemium business model is NOT ideal for offerings that are a part of business-critical processes and require high-level authorization within an organization. Organizations are leery of using a "free" solution for an important function. For this type of use case, I believe the "try before you buy" approach used by companies like Salesforce.com are more appropriate.

The Psychology of Politics

UPDATE #2: Here are some data that support my argument below.

UPDATE: Here is a post that lays out a similar argument to the one I described below.

As my last couple posts indicate (here and here), I am currently obsessed with the 2008 Presidential election. One of the elements that particularly fascinates me is the "mind games" that are played among the participants.

Recently, I have been particularly intrigued by comments made by influential Republicans that basically say they want to go head-to-head with Hillary in the general election and they don't want to go up against Obama. For example, on NPR this morning, President Bush's chief political strategist Matthew Dowd said,

The other thing that I think John McCain has going for him is if Hillary Clinton wins the nomination I know there’s a lot of conservatives out there that said they wouldn’t vote or would vote for her but I think she’s the most unifying force for John McCain out there right now, not himself.

He went on to say later in the interview,

I think if you gave the strategists and people around John McCain some truth serum and asked them to say who they want to run against, in a minute they’d say Senator Hillary Clinton. They think that she’s polarizing; she’d motivate and unite the base of the Republican Party. She’s not a generational difference and a change of a figure, she’s a bit of throwback to the past, like to a degree he is. Against Senator Obama it’s a much more difficult task. It would be a generational campaign, the new versus the older. Somebody that had a distinct stand on Iraq versus his stand on Iraq. I think Senator Obama is a much more difficult race and there is not any vitriol from the conservative and the Republican base against Senator Obama. They don’t sort of dislike him to there core like they do Hillary Clinton. I think they would much prefer, the McCain folks, race against Hillary Clinton than Barack Obama because it’s hard to compose a strategy against a new guy like Barack.

Recent polls indicate that these statements are true and McCain has a better chance against Hillary than Obama, but I am not sure what the motivating factor is here.

Earlier this morning, the cynical side of me thought they are playing a game of "reverse psychology" and they actually want to compete against Obama; maybe they have something up their sleeve about him?

But I think I just came up with the answer, in my humble opinion. They do want to compete against Hillary. By making these statements, and since McCain will most certainly be the Republican nominee, they hope to get Republican-leaning Independents to vote in the Democratic primary and vote for Hillary.

It is well known that the Hillary campaign is putting a lot of their eggs in the Ohio and Texas primaries. Coincidentally, in both Ohio and Texas, a person does not have to declare a party affiliation until they show up to their polling place and request a particular ballot. Hmm.

Radio Silence

I've been "radio silent", from a blogging perspective, over the last month. This is because I've been consumed with two things. First, I have been working hard to help my consulting client, Pathworks Software, launch their service, Helpstream, at DEMO 08 earlier this week. Second, I've also been spending a lot of time working on behalf of one of the Democratic presidential candidates (I won't say who here but you can figure it out if you look at my Facebook profile or follow my Twitter tweets). Once we get past Super Tuesday on February 5th, I hope to get back to blogging on a regular basis.

Government of National Unity. What a Concept.

I realize it is a slippery slope to talk about politics in a predominantly business-oriented blog. Therefore, even though I currently have some very strong opinions on the upcoming presidential race, I have stayed away from writing about politics...until now. An article in this past Sunday's Washington Post caught my eye. The article talks about a bipartisan meeting, which will be held on January 7 at the University of Oklahoma, that will "challenge the major-party contenders to spell out their plans for forming a 'government of national unity' to end the gridlock in Washington."

Much of the article talks about the potential backing of New York Mayor Michael Bloomberg as an independent candidate for the presidency if none of the current major candidates don't make a pledge to "'go beyond tokenism' in building an administration that seeks national consensus."

I don't know enough about Bloomberg to currently have an opinion on him being our next President but I do support the underlying objectives of this session. I strongly believe Washington D.C. is in a state of gridlock because of its deeply partisan nature and nothing will get done until each party is willing to begin working with the other again. David Boren, a former Democratic senator from Oklahoma and currently the president of the University of Oklahoma, says in the article...

Electing a president based solely on the platform or promises of one party is not adequate for this time. Until you end the polarization and have bipartisanship, nothing else matters, because one party simply will block the other from acting.

I am basing my support for the next President primarily on this issue. As a nation, we are in a mess. Domestically, we have big problems that need to be addressed but nothing significant is getting done because we are deeply divided, particularly in Washington D.C. Internationally, we have lost a great deal of credibility with other countries. For our next President, I believe we need a leader who can reach across the aisle and heal our divided nation, as well as regain our nation's credibility in the global arena.

I will be watching closely to see what comes out of the January 7 session.

Have Marketing Launches Changed?

I am currently consulting to a company that is getting ready to launch their company/service. As a result, I have been thinking a lot lately about the different launches I have participated in over the years and I am going to use this post to wonder out loud, "how much time should be spent on getting the messages just right for a launch?"

My first experiences with marketing launches in the technology world was when I worked at Sybase in the late 1980s/early 1990s (yikes!). At Sybase, we used to spend an incredible amount of time preparing for our launches. In particular, we used to spend unbelievable numbers of hours getting our messaging just right. In those days, it made sense to get your messaging right since we didn't have the tools we have available today to change our messages easily. For example, when it came to developing a sales presentation, we didn't have PowerPoint so we used to send out sets of 35mm slides to our sales reps (I will pause a bit to let some of you younger people wonder how silly that sounds). If we made a change to our sales presentation, we would have to send new 35mm slides to each rep. Since you didn't want to do this a lot, you made sure you didn't change your messaging a lot.

Over the years, however, even when things like the Web and PowerPoint have made it easier to change messages, it still seems to be the mindset within enterprise companies to spend a lot of effort getting the messaging just right when preparing for a launch. A couple recent experiences of mine make me wonder if such an effort is worth it.

Over the last year or so, I have been involved with a couple launches that were very successful (a new release at JotSpot and the first public preview of Twine by Radar Networks). Based on these launches, here is my current thinking:

• The messenger is more important than the message. Sure, time was spent on developing the messages for these launches but it was within reason. More importantly, in my mind, both of these launches had great messengers -- Joe Kraus at JotSpot, and Nova Spivack at Radar Networks -- who were able to effectively communicate the right messages.
• A launch is the beginning of a continuous conversation, not a proclamation that needs to be "set in stone" for a period of time. Sure, you don't want to confuse the marketplace and change your messaging often. At the same time, however, it is now very easy (thanks to the Web, pdf, and PowerPoint) to evolve your messages as you learn more from the marketplace.

What do you think? Does this make sense? Or, are things different when you are marketing enterprise software to organizations, versus "Web 2.0 for business" software to individuals and small groups? (I recently wrote another post related to this segmentation.) Let me know your thoughts.