I had a very interesting discussion about scaling a service-based company with the debate being about when and to what extent to monetize the service.
In my opinion offering the service for free at an early stage of the company brings with it a lot of potential perks as you can gain users more quickly. This then allows you to gain critical market feedback, build up rapport and loyalty and, by virtue of improvement to your service, gives you the opportunity to turn early users into fans who will spread the word for you.
Obviously, a company will need to earn at some point in order to be sustainable, but the longer you can hold your breath and draw in more users, the easier it becomes to monetize later. With significant number of loyal customers and their feedback, choices open up regarding monetisation: offering additional premium services to select customer segments and subscription-based models, among others. It also lets you understand which component of the service brings the most value to the customer, potentially making you pivot from your original service offering.
The faster you can get the feedback loop going and the bigger and more accurate it gets, the earlier you will reach a sustainable business model.
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