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Ask HN: Help me settle a strategy disagreement with my startup cofounder

2 points by noraft 3y ago

We've got a B2C SaaS with a free plan and a premium monthly subscription. We've got a working prototype, and are getting ready to pitch for a seed round. My partner wants to launch the free version first and the premium version three months later. I think investors are going to be totally turned off if we're not monetizing right out of the gate. Even if that means we take a little longer to release, I want to release on a reverse trial model where users get the premium features free for 30 days and hopefully like them so much they decide to pay for them. Can't do that if our only product is the free version for a number of months. Of course, we can get the free one out faster if we're not working on premium at the same time, but I don't think that's better than waiting to launch something that monetizes immediately. Which way of doing it is going to be more attractive to investors?

sirspacey 3y ago
Great questions & solid framing. Most importantly, investors do not think alike. You are actually choosing kinds of investors when you choose your GTM. If you have the option to go free first, you can focus on being sticky. If you do both, you can focus on conversions. Generally in a strategy conflict you need to discuss the context level first. So model it out & discuss - what matters more for our success, conversions or retention? You’ll be wrong most likely, whatever you decide, but it will give you a HUD to guide your future decisions with. Common startup experience: “Retention matters more because X” Turns out X doesn’t matter 18 months later you’ve crushed adoption but now can’t retain “Retention is what we’ve got to focus on” But then your Board helps you attract capital on growth alone And so on The point is - strategy is a steering wheel. Reality, the version happening right now, is the road.
- noraft 3y ago
  I'm more concerned about the fact that we're about to start pitching: like, we've had introductions and we've got one-pagers out there circulating, and angels/VCs are asking to meet, and I think if we get in front of investors and say "It'll be nine months until the free version is ready for open release, and three or more months after that for the paid version," we're going to blow those pitches. VCs aren't commodified, and there are a few where we could get great commercial partnerships that I don't want to blow, so I'd like to get opinions on whether I'm in error and we're not going to get doors slammed in our faces when we tell them we plan to launch the free version first and the paid version later, or he's in error and we are.
ggm 3y ago
You cannot launch with a binary choice disagreement between you without exposing the issue of who has primacy in a decision and all that stems from it. Have you considered mediation? Do you have the willingness to be overt that this distinction in intent has risks for BOTH of you? Not the product and what happens: the risk here is your ability to be mutually respectful as co-founders. As an aside, speaking as a user I totally do NOT like being shown the free and only told 2-3 months down the track "here's the pay model to get the bits you need" -If you know how to monetize now, I personally think you should launch now with free and paid or at least expose what paid will be, by intent. That page of the options available in each model as a table with tick and cross marks, as a minimum. That's just my UX input. The above point about risk between you as founders, is what I think your central problem is.
- noraft 3y ago
  He has primacy in decision-making (we're not equal partners), and we'll go with whatever he decides. If he decides not to monetize and its the wrong decision, then I suppose we won't be attractive to investors and we'll have to reassess that decision. I posted this hoping to end up with either of the following outcomes: A) a bunch of people echo my experience that investors are a lot less willing to fund a B2C SaaS that will be given away free for quite some time before the ability to monetize even presents itself, so I can show this thread to him in an attempt to be persuasive, as he has no experience in this area and seeks outside opinions in such situations; or B) a bunch of people quell my concerns by telling me that actually, lots of investors will fund a company giving away free software that doesn't plan to monetize right away, and cite recent examples that aren't unicorns. Because I'm good with either, and if I'm in error, then hey, why not give it away free and build a userbase first, considering that will mean we can release sooner. Well, I guess your qualm with being shown the free and only told 2-3 months down the track "here's the pay model to get the bits you need" is one reason not to do that, which I'll think about. Thank you!

2 points by noraft 3y ago

sirspacey 3y ago

Great questions & solid framing. Most importantly, investors do not think alike. You are actually choosing kinds of investors when you choose your GTM. If you have the option to go free first, you can focus on being sticky. If you do both, you can focus on conversions. Generally in a strategy conflict you need to discuss the context level first. So model it out & discuss - what matters more for our success, conversions or retention? You’ll be wrong most likely, whatever you decide, but it will give you a HUD to guide your future decisions with. Common startup experience: “Retention matters more because X” Turns out X doesn’t matter 18 months later you’ve crushed adoption but now can’t retain “Retention is what we’ve got to focus on” But then your Board helps you attract capital on growth alone And so on The point is - strategy is a steering wheel. Reality, the version happening right now, is the road.

noraft 3y ago
I'm more concerned about the fact that we're about to start pitching: like, we've had introductions and we've got one-pagers out there circulating, and angels/VCs are asking to meet, and I think if we get in front of investors and say "It'll be nine months until the free version is ready for open release, and three or more months after that for the paid version," we're going to blow those pitches. VCs aren't commodified, and there are a few where we could get great commercial partnerships that I don't want to blow, so I'd like to get opinions on whether I'm in error and we're not going to get doors slammed in our faces when we tell them we plan to launch the free version first and the paid version later, or he's in error and we are.

ggm 3y ago

You cannot launch with a binary choice disagreement between you without exposing the issue of who has primacy in a decision and all that stems from it. Have you considered mediation? Do you have the willingness to be overt that this distinction in intent has risks for BOTH of you? Not the product and what happens: the risk here is your ability to be mutually respectful as co-founders. As an aside, speaking as a user I totally do NOT like being shown the free and only told 2-3 months down the track "here's the pay model to get the bits you need" -If you know how to monetize now, I personally think you should launch now with free and paid or at least expose what paid will be, by intent. That page of the options available in each model as a table with tick and cross marks, as a minimum. That's just my UX input. The above point about risk between you as founders, is what I think your central problem is.

noraft 3y ago
He has primacy in decision-making (we're not equal partners), and we'll go with whatever he decides. If he decides not to monetize and its the wrong decision, then I suppose we won't be attractive to investors and we'll have to reassess that decision. I posted this hoping to end up with either of the following outcomes: A) a bunch of people echo my experience that investors are a lot less willing to fund a B2C SaaS that will be given away free for quite some time before the ability to monetize even presents itself, so I can show this thread to him in an attempt to be persuasive, as he has no experience in this area and seeks outside opinions in such situations; or B) a bunch of people quell my concerns by telling me that actually, lots of investors will fund a company giving away free software that doesn't plan to monetize right away, and cite recent examples that aren't unicorns. Because I'm good with either, and if I'm in error, then hey, why not give it away free and build a userbase first, considering that will mean we can release sooner. Well, I guess your qualm with being shown the free and only told 2-3 months down the track "here's the pay model to get the bits you need" is one reason not to do that, which I'll think about. Thank you!