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> It's bizarre that the majority of people on a tech entrepreneurs' forum don't seem to understand this Agree. > The smart move is to instead pay your employe

> It's bizarre that the majority of people on a tech entrepreneurs' forum don't seem to understand this Agree. > The smart move is to instead pay your employees [...] and grow your customer base Agree. > give away your services for cheap Disagree. Giving away your services for cheap is great way to build unsustainable business. It's often a part of the effective strategy, sure. But if you just default into "oh, we'll just sell it cheaply, and increase prices when we're big", then be sure to time your exit, before everything collapses. Selling $1 for 90 cents works only for a limited time.

jiveturkey 5y ago
> Selling $1 for 90 cents works only for a limited time. That's the point with VC money, for some markets. By burning the entire market for everyone else, you can then own it. At smaller scales and for some products this sucks because VC money distorts the market for otherwise perfectly/better designed products but that don't have the same monetization possibility. I believe it's one reason so much VC money pouring into web3 now. They aren't about to let an actual decentralized vision take hold.
- thfuran 5y ago
  In what market does VC-backed entrants selling at a loss to pick up market share not distort the market?
bscphil 5y ago
> grow your customer base > give away your services for cheap I think your parent comment's view is that these go hand in hand. Sure, there are tons of bad examples of this which really do only amount to selling $1 for 90c. Sometimes, however, the point of customer acquisition isn't just so that you can switch from selling $1 for 90c to selling 90c for $1 (which won't work), but to solve your scaling problems before you try making a profit. It's easier to fix issues and deploy new or experimental technologies in a period of easy money and customers flooding your doors than it is when you're skating by on thin margins.
- __blockcipher__ 5y ago
  > It's easier to fix issues and deploy new or experimental technologies in a period of easy money and customers flooding your doors than it is when you're skating by on thin margins. But this describes to me the "sell $1 for $.90" strategy, not the other way around. IOW I think it's an argument for why selling cheaply is often not a good idea. And wrt the parts of your grandparent's comment you quoted, it's not really accurate to call it "growing your customer base" when you're growing it via giving away unreasonably cheap services. It is often the case that the majority of customers acquired in such a way won't stick around when prices are later increased to a realistic level. This is why in general I advocate for businesses to price well, not cheaply, and to try to get real growth - that is, people willing to pay the money your services are actually worth. There are times where "acquire new customers at all costs, even by giving unrealistically good bargains" is the optimal strategy, but I think it should be something done 10% of the time rather than the 95% of the time it's done in our industry.

jiveturkey 5y ago

> Selling $1 for 90 cents works only for a limited time. That's the point with VC money, for some markets. By burning the entire market for everyone else, you can then own it. At smaller scales and for some products this sucks because VC money distorts the market for otherwise perfectly/better designed products but that don't have the same monetization possibility. I believe it's one reason so much VC money pouring into web3 now. They aren't about to let an actual decentralized vision take hold.

thfuran 5y ago
In what market does VC-backed entrants selling at a loss to pick up market share not distort the market?

bscphil 5y ago

> grow your customer base > give away your services for cheap I think your parent comment's view is that these go hand in hand. Sure, there are tons of bad examples of this which really do only amount to selling $1 for 90c. Sometimes, however, the point of customer acquisition isn't just so that you can switch from selling $1 for 90c to selling 90c for $1 (which won't work), but to solve your scaling problems before you try making a profit. It's easier to fix issues and deploy new or experimental technologies in a period of easy money and customers flooding your doors than it is when you're skating by on thin margins.

__blockcipher__ 5y ago
> It's easier to fix issues and deploy new or experimental technologies in a period of easy money and customers flooding your doors than it is when you're skating by on thin margins. But this describes to me the "sell $1 for $.90" strategy, not the other way around. IOW I think it's an argument for why selling cheaply is often not a good idea. And wrt the parts of your grandparent's comment you quoted, it's not really accurate to call it "growing your customer base" when you're growing it via giving away unreasonably cheap services. It is often the case that the majority of customers acquired in such a way won't stick around when prices are later increased to a realistic level. This is why in general I advocate for businesses to price well, not cheaply, and to try to get real growth - that is, people willing to pay the money your services are actually worth. There are times where "acquire new customers at all costs, even by giving unrealistically good bargains" is the optimal strategy, but I think it should be something done 10% of the time rather than the 95% of the time it's done in our industry.