3 ms·

We tried the typical SaaS startup freemium model for what we thought would be our Blackboard killer (hint: it wasn't). We offered it for free to individual tea

by shimms 13y ago

We tried the typical SaaS startup freemium model for what we thought would be our Blackboard killer (hint: it wasn't). We offered it for free to individual teachers with the strategy of enlisting an evangelist group of dedicated and passionate teachers at institutions. The plan went that once a critical mass of teachers from a given institution where onboard and using it, we would trigger the enterprise sales approach and sell the product to the institution. We had some uptake from teachers, who universally loved the product. They raved about it in fact. We were super excited. We thought we were onto a winner. They told their friends and colleagues who in turn signed up, and they too loved it. And raved about it. And told their friends about it. Unfortunately the vast majority of them never actually delivered a course on it with live students. We were stunned. After prodding and asking, and eventually getting to the bottom of it, we found that whilst the vast majority of teachers loved the product, and loved the idea of using it for their courses, they wouldn't use a product that wasn't centrally supported by the institution (or even in quite a few cases, couldn't use a product that was specifically prohibited by their institution - they were only allowed to use the prescribed LMS, which in most cases was Blackboard or Moodle). So my tip for entrepreneurs trying to break into the enterprise LMS space is appreciate your an enterprise sales company. Your users are not your buyers, and even if they love your product, if you aren't selling it to the buyer you'll die. I don't believe this is a market in which you can offer a freemium product to the individual with the intent of penetration reaching the masses through viral or other growth strategies. It might be worthwhile to do this to help get exposure, but don't expect to get actual sales, or actual usage, off the back of it. This isn't an industry in which a Yammer approach works (IMHO).

robterrell 13y ago
This is hugely valuable advice. Ignore the parent post at your peril! You need to be constantly vigilant about who your users are versus who your customers are. If there's a divergence, you need to make sure it's accounted for & benefiting you. Many companies think "let's build the best thing we can, and the users will love it and win over the IT department, who will write the checks." Microsoft's ongoing record revenues, in a time when the PC market has shrunk and WIndows 8 sales are tanking, proves that theory wrong. Having lived through this myself, my advice to to come up with price points that middle managers can expense without institutional review. But if you don't plan for this from the start, it can be a frightening to go from a sales forecast of 20-odd $100,000 sales to one that forecasts 100,000 $20-ish sales...with the same sales team.
- shimms 13y ago
  Thanks - but right back at you with the price point threshold. We called it the "credit card approval limit". If a divisional/departmental manager can approve a purchase on their credit card without seeking director or board level approval you'll have a much easier time getting past the penny gap with customers.
  - sbierwagen 13y ago
    http://www.joelonsoftware.com/articles/CamelsandRubberDuckies.html http://www.joelonsoftware.com/articles/CamelsandRubberDuckie... The reason I bring this up is because software is priced three ways: free, cheap, and dear. 1) Free. Open source, etc. Not relevant to the current discussion. Nothing to see here. Move along. 2) Cheap. $10 - $1000, sold to a very large number of people at a low price without a salesforce. Most shrinkwrapped consumer and small business software falls into this category. 3) Dear. $75,000 - $1,000,000, sold to a handful of rich big companies using a team of slick salespeople that do six months of intense PowerPoint just to get one goddamn sale. The Oracle model.
  - devilshaircut 13y ago
    I found your comments to be hugely insightful. I am working on a project in the same general area (education) with a business partner and I was wondering if you'd be so kind as to let me pick your mind on the topic and learn from your experience. I have my email available in my profile although I am happy to reach out to you if you're open to it. In any case, like I said before, I found your insights very valuable. Thank you for sharing.
    - deleted 13y ago
      [deleted]
marquis 13y ago
Isn't Moodle open-source? If you offered a wrapper for Moodle that made it a hell of lot nicer, maybe teachers could gradually move away from it towards a superior, affordable offering without the wrath of their powers-that-be. I don't know about Blackboard's internals, if you can do that too.
prawn 13y ago
I wonder if a risky marketing tactic of "Everyone hates Blackboard but no one has the balls to use a better product [like ours]" might work to bait buyers in these situations? Liken it to the majority buying PC when kids might prefer Mac. Imply "Do you have the guts?" "A lot of prospects we speak with haven't had the authority to step away from the herd." i.e., do they want to think of themselves as having the authority, being at the forefront, having the balls, etc.
- User8712 13y ago
  Not sure if that's a good approach. Why do they need balls or guts to use your software? It's that risky? If your software is at the forefront, why is no one else using it? I think most schools want to see something that's proven, low risk, and beneficial. If you can show them some of the top schools are using your software, and their faculty and students are raving about it, and how it's making their lives easier, reducing costs, and how the transition from BB was seamless. The problem is obviously getting the first few schools. You need to eliminate as much risk as possible. You need a lot of credible sources backing you in this situation to make buyers more comfortable.
  - prawn 13y ago
    I acknowledged that it was a risky strategy, but the alternative is to not get noticed at all because the buyers get stuck comparing checkboxes rather than realising that feature creep can make for an unwieldy behemoth.
- nl 13y ago
  Blackboard is the Sharepoint of education software. Universally loathed by people who know, but stacks up well on feature comparisons charts. Players like Canvas[1] are sort of trying your idea. The front page of their website reads: IS IT REALLY A LEAP OF FAITH WHEN YOU JUMP TO SOMETHING BETTER? “It just works.” “It’s easy to use.” “It lives up to high hopes.” “It’s the next generation of LMS.” These are just some of the reasons San Jose State University decided to switch to Canvas. And are glad they did. They compete directly with Blackboard and seem to be doing ok. [1] http://www.instructure.com/ http://www.instructure.com/

by shimms 13y ago

robterrell 13y ago

This is hugely valuable advice. Ignore the parent post at your peril! You need to be constantly vigilant about who your users are versus who your customers are. If there's a divergence, you need to make sure it's accounted for & benefiting you. Many companies think "let's build the best thing we can, and the users will love it and win over the IT department, who will write the checks." Microsoft's ongoing record revenues, in a time when the PC market has shrunk and WIndows 8 sales are tanking, proves that theory wrong. Having lived through this myself, my advice to to come up with price points that middle managers can expense without institutional review. But if you don't plan for this from the start, it can be a frightening to go from a sales forecast of 20-odd $100,000 sales to one that forecasts 100,000 $20-ish sales...with the same sales team.

shimms 13y ago
Thanks - but right back at you with the price point threshold. We called it the "credit card approval limit". If a divisional/departmental manager can approve a purchase on their credit card without seeking director or board level approval you'll have a much easier time getting past the penny gap with customers.
- sbierwagen 13y ago
  http://www.joelonsoftware.com/articles/CamelsandRubberDuckies.html http://www.joelonsoftware.com/articles/CamelsandRubberDuckie... The reason I bring this up is because software is priced three ways: free, cheap, and dear. 1) Free. Open source, etc. Not relevant to the current discussion. Nothing to see here. Move along. 2) Cheap. $10 - $1000, sold to a very large number of people at a low price without a salesforce. Most shrinkwrapped consumer and small business software falls into this category. 3) Dear. $75,000 - $1,000,000, sold to a handful of rich big companies using a team of slick salespeople that do six months of intense PowerPoint just to get one goddamn sale. The Oracle model.
- devilshaircut 13y ago
  I found your comments to be hugely insightful. I am working on a project in the same general area (education) with a business partner and I was wondering if you'd be so kind as to let me pick your mind on the topic and learn from your experience. I have my email available in my profile although I am happy to reach out to you if you're open to it. In any case, like I said before, I found your insights very valuable. Thank you for sharing.
  - deleted 13y ago
    [deleted]

marquis 13y ago

Isn't Moodle open-source? If you offered a wrapper for Moodle that made it a hell of lot nicer, maybe teachers could gradually move away from it towards a superior, affordable offering without the wrath of their powers-that-be. I don't know about Blackboard's internals, if you can do that too.

prawn 13y ago

I wonder if a risky marketing tactic of "Everyone hates Blackboard but no one has the balls to use a better product [like ours]" might work to bait buyers in these situations? Liken it to the majority buying PC when kids might prefer Mac. Imply "Do you have the guts?" "A lot of prospects we speak with haven't had the authority to step away from the herd." i.e., do they want to think of themselves as having the authority, being at the forefront, having the balls, etc.

User8712 13y ago
Not sure if that's a good approach. Why do they need balls or guts to use your software? It's that risky? If your software is at the forefront, why is no one else using it? I think most schools want to see something that's proven, low risk, and beneficial. If you can show them some of the top schools are using your software, and their faculty and students are raving about it, and how it's making their lives easier, reducing costs, and how the transition from BB was seamless. The problem is obviously getting the first few schools. You need to eliminate as much risk as possible. You need a lot of credible sources backing you in this situation to make buyers more comfortable.
- prawn 13y ago
  I acknowledged that it was a risky strategy, but the alternative is to not get noticed at all because the buyers get stuck comparing checkboxes rather than realising that feature creep can make for an unwieldy behemoth.
nl 13y ago
Blackboard is the Sharepoint of education software. Universally loathed by people who know, but stacks up well on feature comparisons charts. Players like Canvas[1] are sort of trying your idea. The front page of their website reads: IS IT REALLY A LEAP OF FAITH WHEN YOU JUMP TO SOMETHING BETTER? “It just works.” “It’s easy to use.” “It lives up to high hopes.” “It’s the next generation of LMS.” These are just some of the reasons San Jose State University decided to switch to Canvas. And are glad they did. They compete directly with Blackboard and seem to be doing ok. [1] http://www.instructure.com/ http://www.instructure.com/