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Well, the core problem is that the freemium model is not sustainable for most businesses. There are very very few companies that can remain cash flow positive (
by ksk 13y ago
Well, the core problem is that the freemium model is not sustainable for most businesses. There are very very few companies that can remain cash flow positive (let alone making large profits).
The execs get paid well because the owners of those companies assume (rightly or wrongly) that the execs performance determines the outcome of the business. The average engineer working in that company is assumed to not have such power (which is true for a lot of companies).
BTW If any company started holding up salaries of their employees dependent on profit, nobody would join that company !
- thedufer 13y ago> BTW If any company started holding up salaries of their employees dependent on profit, nobody would join that company ! That's a pretty bold statement. Any particular reason you think that's true? I don't think profit sharing is that arcane of a concept. Unless you're talking about the extreme of no salary, only profit-sharing, in which case, yeah. But that's not what execs get, either.
- ksk 13y agoGood point.
- InclinedPlane 13y agoI disagree on your last statement. I think that if a reasonable base salary were provided and profit sharing was done well and was truly equitable (i.e. not more than an order of magnitude different from 1/n of profit for n employees) then it could be quite attractive. It's all about trust and track-record.
- deleted 13y ago[deleted]
- ksk 13y agoYes, there is room for disagreement. I accept your point.
- deleted 13y ago[deleted]
- acjohnson55 13y agoI think you're wrong on a couple counts. Freemium does work in the medium term if you can generate enough value in your networks and data as an asset to grow your valuation. You obviously do eventually need to stop recapitalizing and monetize at some point. I would argue that a lot of companies should do this a much earlier point in time, rather than growing without reasonable bounds. A counterexample to you last point is being a startup founder. For these folks, until you prove your concept to investors and/or go cashflow positive, your salary is completely dependent on profit.
- ksk 13y agoFreemium model is setup so that it drives unsucessful companies to abuse their users for more data or in the case of microtransactions it leads to them employing psychological tricks to get the "whales" to spend more and more while the long tail continues to enjoy the service for free.. A startup founder is the owner (part or full) and is not a regular salaried employee. Hardly a counterexample...
- acjohnson55 13y agoI agree with the first problem with the freemium model, but not really the second. You don't necessarily need to rely on psychological tricks if you can provide premium services of actual value.