Fear of Money
There's been an illness going around startup land, a crippling disease that is paralyzing startups everywhere.
This sickness is called fear of money, and thousands may be afflicted with this epidemic.
A lot of startups, especially SaaS startups, are extending their free beta for far too long. So many companies seem scared of pulling the trigger and asking their users to give them a dollar, and evolve from users to customers.
The concept of a “free beta” dates back to desktop software, where beta versions were distributed to enthusiasts and early adopters. Beta versions of paid software were buggy, broken, and not unlikely to crash your system or delete all your data. They came with no support or warranty, and were meant for a small subset of users who would test the product at their own risk.
Now, feature-complete, mature products-including many SaaS products aimed at businesses, targeting mainstream users are routinely released as “limited time free beta”. They're just happy to get users, eyeballs, and “customer development”. These products work as well as commercial competitors. They come with full support. But they're still free for a limited time, because these startups are so very scared of asking for money.
Their fear is justified, because the second you start charging for a product, all of the bubbly bullshit falls away. The market is cold, rational, and effective. It doesn't care about your lean startup methods, your rockstar team, or your fawning tech press. All of your assumptions, vision, business plans and pitches are irrelevant.
You've either built something worth paying money for, or you haven't.
The moment you get paid for your product, is the moment you emerge from the warm, caring Silicon Valley cocoon into the real world, where people are used to paying for things they want. The real world, where most of your future customers are. When you start actually selling something, your company grows up from a prototype into a real business.
It's natural to want to delay growing up as long as possible, to bask in fuzzy glow of revenue projections and hockey stick growth estimates, in optimism for a sunny future where nothing can go wrong.
The realization that you're selling something nobody wants is like a punch in the gut, an empty, sinking feeling that sucks all the oxygen out of the room and leads you to question your very existence.
Your unconscious recoils in horror at that possibility, and you try to rationalize delaying the moment of truth with escalating excuses.
“Just one more feature. Then we'll be ready”. “We need to do more customer development first”. “We haven't A/B tested our landing pages yet”.
But by refusing to charge for your product, you're only delaying the inevitable. At some point, you'll need to confront reality, and the more you delay it, the worse the outcome.
So rip off the band-aid. Get out of beta. Ask for money. Now.
This is why I think App.net is so important. App.net is the cure to fear of money.
It's an early beta. It's minimal and incomplete. And it has done over $500,000 in sales in just a few weeks, because the founder got the fear of money out of his system and had the guts to get a product out to market and sell.
People will pay for a beta product, if you make something people want. And the easiest way to see if you're making something people want is to test if they're willing to pay for it.
The greatest impact of App.net for the startup community might be as the harbinger of a new dawn of products that are designed to make money from day 1.
If people want something that solves a problem for them, they will always be willing to pay for it. Always remember that.