You advertised video courses taught by talented entrepreneurs. Later, you launched what is effectively a forum. These two things are hardly similar, but you charged users for the latter when they signed up to pay for the former.
Couch it in as many euphemisms as you want, but you tricked people for your own gain. I don't want someone to do that to me, and I won't do such a thing to someone else. Unfortunately, you didn't treat others as you like to be treated. I think that's unethical.
In the future, please treat your customers with more honesty and respect.
Let's consider a meat space analogy. Say I'm establishing a maid service. I don't have any maids or cleaning equipment, but I want to gauge interest in the neighborhood by signing people up for appointments and take their billing info. I don't tell them that this is what I'm doing. If I "reach out" to my customers and then say "J/K, I don't have an actual business yet, but I will soon!" that doesn't make it all okay. If I took any money on top of that, that's fraud. Indeed, even if I didn't take any money, taking billing info for a product that doesn't exist without telling customers as much is sketchy as fuck at best.
> Adii isn't forcing anyone to pay
I'm more discouraged this guy was given a platform to promote this approach at MicroConf Europe. How sad to 'hear directly from his customer' that he only discovered how he was being scammed when he attended the presentation! https://news.ycombinator.com/item?id=6515095
The roadmap was actually changed because of those customers, so presumably the end result should align better with what they really were looking for.
I would've done an opt-in though.
Opt-in would have been the minimum to my taste. Here is how I lived the experiment from here:
- the billing info was captured by making me believe the content was completely available (it's actually still advertised here http://publicbeta.co/library/)
- I wrote to Adii who asked back for my trust etc, I said: ok let's wait until this guy is able to bootstrap his stuff, let's give him a chance
- later, I received a mail which I didn't fully read ("Announcing our new launch", I just assumed that everything was going on as planned - I didn't receive "We change everything, are you ok with that?" as the subject or similar)
- then I got charged for something different from what my billing info was captured for
EDIT: I then realized what was happening by actually attending the MicroConf Europe where Adii made a presentation.
- I tried to cancel but could not find a link to cancel from inside the app
- I asked for a refund + cancellation by email and got it
Note that I'm in no way angry (personally) against Adii!
I'm just analyzing this from a customer perspective.
The problem is that trust is basically broken at step one, and then later one can only wonder if the long email then the charge without clear notice then the lack of link to cancel etc aren't just other tactics to keep the game going on.
I wouldn't recommend using these techniques to friends!
I'm pretty sure this is illegal and risky to do (at least in some countries) and could actually break the TOS of Recurly or payment gateways.
Again, nothing personal, I'm just sharing my experience in case someone wants to mimic the technique here.
Personally I wouldn't mind about leaving my CC details if I was told the entire truth afterwards and then had the opportunity to opt-in again. Any reason why you didn't take the "second opt-in" approach, Adii?
So this would still be a dark pattern even with an opt-in, since people will mentally start rationalising ("It's a good service for smart entrepreneurs like me to learn from each other") instead of assessing it from scratch ("It's an online startup community I pay to belong to. Is that worth $30 a month? Hacker News is free...").
It's a shame, because if the thing people had paid for had been delivered this would have probably been okay, but as it is, it seems pretty unethical.
 Can't find a good reference, but basically avoiding http://en.wikipedia.org/wiki/Cognitive_dissonance
It probably isn't, unfortunately. But I hope your company fails. You should not get away with such behaviour.
A decent person would learn from all the people here saying "This is not an acceptable way to behave", and issue an apology for boasting about how they made a profit from deceiving their customers. I wonder: are you a decent person?
To keep the discussion productive, I think we ought to look at similar ways to validate a product that more of us would be comfortable with.
Edit actually, patio11's take on how to validate struck me as a pretty good approach:
It's pretty long, so if you find "This one day I went into a massage therapist, and asked" that's the start of the story.
I disagree with him about 'The Lean Startup' though, I thought it was a bit too ... "high level".
For every person that has criticized this, I have had another one saying this is great. I also know for a fact that I'm not the first startup entrepreneur to do this.
I have already apologized to each and every one of our customers. I have also mended the relationships (AFAIK) to the extent that the "angry" customers would consider being customers in future.
Ultimately, I think that this was ballsy publishing this and being open about the pro's & cons of this. I'm not saying that this is the best technique ever and neither am I saying that everyone should follow this approach. I am however saying that it worked for us and I am keen to engage others on this topic.
The fact that you brag about it so boastfully is atrocious to be honest.
I didn't find his post to be bragging 'boastfully' at all. It reads chiefly informative and at times positively surprised. He found a technique that seems to work pretty well and he informs us about it.
I think your opinion is too harsh. Imagine yourself to be the customer of this website. You come across something you like so much you're willing to pay for it and you make the commitment to actually do so. Sure the revelation that the product does not exist yet is disappointing, but he also didn't take your money yet, and his website already convinced you that the product is going to be what you're looking for.
The shady part is doing the pivot without doing another opt-in. It's a classic bait ("Subscribe to get access to videos") and switch ("Continue paying to get access to a community and the promise of plans to make said videos in the future").
There's a major difference between trying to scam someone and pushing the boundaries to validate (and de-risk) an idea. If our ideas are shit, I will never take someone's money for that (hence the no questions asked, full refund).
These are Hacker News commenters, prototypal white knights eager to show off their perfect moral compasses, disregarding any opportunity for reflection or relativism.
No, it is not something I would have done, but I really understand the need to have some idea of what's going to work, and could see how one might go too far in pursuit of that.
For someone who is hearing of you for the first time, combining the subject matter under discussion and your admission of obviously exaggerating your post title makes you come across to me like a habitually deceptive person IMHO
When 5.5% of your initial customers feel scammed and are are upset about being deceived it may be an "acceptable loss" from a business perspective, but I certainly don't think that's a "great result". 5.5% is a lot. For comparison, an eBay vendor with that many unhappy customers wouldn't last long.
Bootstrapping communities is notoriously difficult, and I'm well aware that the use of "community building hacks" are more the norm rather than exception, but I'm still not going to applaud this behavior.
He didn't actually charge people before the product was finished and they were able to opt-out after they knew what happened. Would have been a whole different story if the cards had actually been charged.
The way he did it allowed him to validate the idea in the exact same situation he would end up after building it, so it's a great way to take the (huge!) risk out of building a product.
Personally I wouldn't mind as a customer as you did know all the facts before you were actually spending the money.
I sure as hell wouldn't want to be the unknowing recipient of his "experiment".
If you didn't like the experiment you had the possibility to opt-out and never become a customer of him again, without having to pay a single dime.
He does note that he had to "authorize a $0 transaction" in order to store the details for each credit card.
But leaving that aside, not only was his conduct misleading, query whether legally enforceable contracts were entered into as soon as mutual promises were exchanged (promise to pay made by proffering means of payment in exchange for promise to deliver product).
If that is the proper analysis, a distinction based on whether the credit cards were ultimately charged does no more than draw the line between civil and criminal liability.
He should be glad that no one actually relied on what he said. Those who deal with him in the future might now do so with a degree of caution. He has probably copped enough flak in these comments to bring the message home to him - or at least I hope he has. I like the premise for PublicBeta, and it would be a shame if that service were tarred with the same brush.
I'm amazed someone has the gall to boast about this type of thing publicly while blatantly ignoring the long-reaching repercussions their actions could have throughout the entire startup community.
People routinely go to prison for similar types of deception in other industries. It is a slippery slope that is surely testing the bounds of fraud while ruining the reputation of legitimate startups everywhere.
OTOH, I can understand the risk avversion: if they've given you a CC number (they were not, however, charged), they're a Real Customer and your product is far more likely to have legs than just getting an email address, which is in turn better than not even having a pre-launch page and just hoping people want whatever it is you've slaved away building for months. Spending a lot of money to build something only to find no one wants it, or wants a fairly different version sucks big time!
One of the reasons for publishing this and being open about how this worked is to be a catalyst for a conversation around this, which would hopefully see a refinement of the technique.
To say that something is completely legal does not make it unethical. So I do hope we can find a better way. The false advertising that companies put out makes me sad but it's also an opportunity for businesses to be honest with their customers.
Question for you though: You mentioned you received numerous signups signalling their interest. Could you have conducted your interviews with them instead? From the story, it seemed to me like the key point was identifying the needs of the customers. Of course, the ones who placed their credit card information are the ones most interested which filters them out from the rest.
There are ways to measure buying signals. Please research them. Here, I'll do you a solid, and Google "how to measure buying signals"
Oh, look: http://www.socialmediaexplorer.com/social-media-marketing/ca...
While it's not my intention to hold this up as the authority on buying signals, what you will pick up on is that nothing on this page talks about the number of subscribers on an email list. Subscriber counts are, at best a weak buying signal. It measures interest, not willingness to purchase.
This goes way beyond that. This is no longer a grey area. This is lying to potential customers. Justify it however you want, it's wrong.
This feels like deception for the sake of deception and I would have been among those who were pissed had I signed up.
(I know that many Kickstarter projects that were successful have turned into longer-term, sustainable businesses.)
People do manage to "kinda/sorta" validate their ideas by getting email signups. Granted, it's less accurate than actually collecting CC details, but it does provide some indication. And kickstarter involves actual money, so perhaps it gives you a better idea than email, even if it's not quite as good as getting their CC. Maybe that tradeoff is worth it in terms of openness with your future customers?
People are just anonymous hits online, right? Drive up the hits. How? Just manipulate people. Oh, we got money? Chest bumps and high fives all around. We did it!
When you start thinking about "right" or "wrong" when doing work like this, your world falls apart, so you don't think that way. You run the hustle. You run the borderline-illegal practices all in the name of growth. When you're successful it'll all be forgiven by rich people who want to leech of your success anyway.
If we keep telling ourselves it's bad/wrong/illegal, all the people willing to do this shady work will end up ruling the world while we still sit on our poor sanctimonious asses.
I'd like to hear more about what people said in the customer interviews. Here's my experience as a consumer...
After flipping through the library, I signed up immediately. The cost/value was very high.
After putting in my credit card details, I was put in a queue, which was a little frustrating as I was expecting instant access, but I got over it quickly and didn't mind waiting. I think this was fine.
The big problem came when the library disappeared from the site and the business went in a very different direction. I had pledged $30/month for something specific (the videos from high-profile entrepreneurs), so it was disappointing to see that it wasn't going to happen. It even entered my mind that it was only ever a carrot to get my credit card details and that there was never an intent to make the videos. So, some confidence lost there. Also, still having my credit card on the hook for something else that I hadn't yet learned about was a bit disconcerting.
Adii is a friend and I was still curious about what it would be, so I stuck with it. It's highly likely if I didn't know the founder, I would have cancelled immediately.
I struggle to consistently participate in communities, so I will be cancelling my membership. The video library was more my thing, consumption without engagement. And that's what I pledged my $30/month for.
1) The intention was always to produce the videos / content. And it still is too (we have just deprioritized this and tweaked the roadmap from our initial plan).
2) The customer interviews we had (along with the survey we did thereafter) gave us insight into what our founding customers really paid for and for the majority that wasn't the content.
2) Yep, re-prioritizing based on this makes complete sense.
Although I agree with some of the points such as launching early and the communication aspect of it. I'm against deceptive tactics to get sales. Even though he said that it didn't feel good, then why continue with the same tactic? Does getting the sales and numbers justify the actions?
I'm in the same boat as the author at the moment and if anyone out there has any advice I would greatly appreciate it.
Thanks in advance.
That's what I'm doing at the moment. One of the biggest pivot in my Internet habits is that I've changed from being a lurker (just looking and not doing things) to being more active in the community, discussion or post. Even on HN. I've been here for ages but never contributed anything of value.
That will change now as I have to be able to harness the comments and engagements of people who are more knowledgable than me in this respect.
Thanks again for your advice.
On the subject of deception, Adii hasn't yet replied to my comment about this section from his previous article:
"So I took the testimonials that they had left on my Clarity profile, reworked them (for the purpose of my book) and sent it to the individuals (along with a sample chapter of the book) for approval."
I wonder if you looked in to your legal obligations at all? I know in the UK a company has a duty to trade fairly and not mislead consumers....I'm not sure to what extent you fall foul of the law if you do something like this?
Worst PR ever.
I don't understand how this is going to help anybody's cause.
Damn straight I wouldn't. And I sure as hell wouldn't be giving you my credit card details to store on file. I don't care what your PCI compliant third party provider is like, if I give you my credit card details, unless its a refer payment, then you debit it and throw away the card details.
This is totally unethical business practice. It's a bait and switch as far as I'm concerned!
Is it even legal?
The angry customers you get can ruin your reputation very very quickly. Angry customers are the ones that usually go out of their way to write bad reviews.
The reality is: Yes, angry customers are never good for business or brand building. Neither are bad reviews. Trust me when I say that I hate the fact that I had angered even one individual.
That said, I interacted with every one of the angry customers and explained the rationale behind the decision. I managed to resolve the emotion to the extent that they were appreciative of my explanation / reasoning and would even consider becoming a customer in future.
I stick to what I've said though, which is that putting up a landing page with an e-mail signup and a "Request Early Access"-kinda thing is similarly deceptive. The only difference is that I actually asked for CC details. To that extent, I'm willing to do whatever I need to do to see my startup succeed.
This is obviously not for everyone and that's why I posted the quote from Lincoln.