

Bootstrapping an Idea: the Paid Beta - WadeF
http://bryanhelmig.com/bootstrapping-an-idea-the-paid-beta/

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fudged71
This model might be great if you have a successful and well-researched idea.
But I'm concerned about validation, costs, and pivots.

What happens when your learnings pivot the app in a direction that [some] paid
users aren't interested in? They have bought access to a service which might
not align to their needs anymore and they likely wouldn't have access to the
version which they paid for. Sure, a dollar is a small amount, but I feel as
though the effect is more pronounced than with free services. Heck, free
services get flack a lot of the time for changing strategy or shutting down.

I guess if your feedback and learnings are from the vocal majority, you might
underestimate the backlash from the silent _real_ majority.

Furthermore, what happens when you have 10 paid signups (let's say $10 total)
for a service that needs $100 worth of infrastructure? Do you end the service
and refund the money? Do you pocket the money and move on? Do you fork up the
remaining infrastructure cost from your pocket and continue? I thought the
value of kickstarter and the MVP model was the validation to support the
product, whereas this model seems to have a grey area in that regard.

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bryanh
So, basically, that boils down to:

    
    
        I have a critical mass of paying users and I
        have to disappoint a small portion of them.
    

I hope I'm not misrepresenting your comment because on the spectrum of
problems afflicting early stage startups, _them's the good kind_.

On a more serious note, we didn't have too much of a problem with it and we
had to say "no" quite a few times. We'd just offer to refund their money and
explain the situation the best we could.

~~~
fudged71
Yes but you're describing this as an alternative to the free beta/mvp model.
With an equal number of hypothetical users, you're disappointing paying users,
where the alternative is that they haven't paid (and I postulate that they
would be less disappointed because of it!). Perhaps the free model could be a
more positive experience for a brand, and have less frustrations on the
customer service side.

I guess it's just another factor to consider. They both seem to be viable
models. And I'm not experienced with either.

~~~
WadeF
We actually found people who paid us to be much more helpful and understanding
with potential issues. Probably because they knew we were working hard on
solving a problem that they paid for. We also offered a money-back guarantee,
but barely anyone ask for one (<1%). Customer service isn't bad since the
volume for a paid beta isn't what you'd see for a free beta. This has the side
affect of keeping your beta group contained so that you really get to know
your users.

Free users were the opposite. They would be angry when things didn't work out
quite right and complain about the beta price (roughly $5, though we moved it
around some). Free also has more issues on the customer service side simply
because you have to do more of it.

I can certainly think of scenarios where a free beta makes sense, but if I'm
starting another B2B company I would charge from day one all over again.

~~~
fudged71
Interesting observations. Thanks!

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callmeed
I really like this and I'm doing it with a new product we are building. We
have existing customers on our main product and this new one is based on a
survey of them. So, I think we have enough validation to do a paid beta.

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asperous
I think in a kickstarter-like way, this could work. If you make your users
feel like buying in early could benefit them in the long run, and that they
get some say in how the product develops, I could see myself paying into a
startup service I really felt like I needed.

Of course, it only takes a few of these to crash and burn, or completely not
listen to their users and turn against them to make people lose trust in the
whole model.

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salman89
There is a valuation issue here - if you have # of customers x, price your
product at y and make revenue z=x _y, your valuation in future seed rounds
will somewhat become based on revenue z. If revenue z is not pivotal to your
runway, you might be better off pitching to VCs that your revenue can be z'=x_
y', where y' is your real value to customers. If y and y' differ by a
significant factor (which the OP seems to be advocating), you can make a
significant negative impact on your valuation as a company.

I don't see that charging customers a fraction of what they would pay in the
future provides the benefits the article says: "It meets two pretty crucial
components of a proper early stage startup: talk to users and write code." You
can talk to free users and you will still be writing code.

"The minor revenue is not the prize. The fact that someone will pay you at all
for some promised product is the prize." If you are providing real value for
your beta customers, it will not be hard to determine that they would pay in
the future.

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frozenport
Most small companies launch products that would be considered beta by any
major company. We already have paid beta!

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bradleyjoyce
I would consider my company, <https://socialyzerhq.com>, to currently be in a
paid beta period.

Our paying customers are amazing. They provide us awesome feedback and
encourage us to keep going.

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alexsilver
This sounds great on the surface but I'm always wondering about specific
implementation of this method. How do you charge people for a promise? Do you
set a certain timeline so people have something to look forward to?

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chmike
Would this work for projects with a strong network effect ? Let say a new
whatsapp (example).

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comex
It seems apparent that it wouldn't - convincing all your friends to download
some random app is one thing, convincing them to pay more than $2 is another.

Then again, app.net went with this model and a fairly high price and is
moderately successful. (The combination of a target audience generally highly
willing to pay money for internet things and a large amount of hype probably
helped.)

~~~
chmike
Thanks. This is surprising indeed. Will it stick ? I doubt it was
bootstrapping.

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capex
This is very specific to Zapier. It won't be applicable to a majority of the
startups.

~~~
bryanh
Really? Asking people to pay earlier rather than later can _only_ work with
Zapier?

~~~
jasonbarone
I don't agree with that but you have to admit Zapier is in an entirely
different category than most apps. The product is delivering things almost no
other app is doing, and it can solve major problems with high development
costs. I would have thrown money at it without even using the product, whereas
these newly executed old idea apps are just not that interesting...

