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An AAPL a day

It’s been 1 week since I switched to the dark side, and I couldn’t be happier.

For years I didn’t want to be a part of the Apple cult. Then I started noticing some of the smartest people I know switching. And (almost) nobody was coming back. They must be on to something.  Then I got an iPad, and finally started to understand what the fuss is about.  Last week I switched to a Mac, and despite the fact that shortcuts (Excel in particular) are kicking my ass, I’m never going back.

The thing that Apple got right is hard to describe. The best way to summarize it came from Mr. Sasha Strauss. He explained that brand loyalty comes not from features, or quality of the product, but from the overall experience the brand creates.  It’s much more about feeling than logic:

1. The hardware. It’s SO nice to look at and touch. The touchpad feels/works so much better than the one I had on my old Samsung (which was best in class on PCs)
2. The software. It gives you a feeling that it will never break, that you can rely on it 100%. It just feels “solid”.  I never got that with Windows.  Even if it does break, I will view it as an exception. 
3. The whole experience. It starts when you open the box. It’s beautiful.  And it continues as you’re setting up, installing apps, and messing around with stuff.  It’s really not about the features (even though they are great). It’s about the feeling you get.  I literally have developed a feeling of love for the device. 

I also bought a bunch more of AAPL stock.  Given Apple’s growth in China, the fact that they have only now started entering the enterprise space, and haven’t even touched mobile payments, I’m all in.

Death to Freemium

There’s a psychological barrier to paying online, and it needs to stop.  

We pay for things in real life every day. We don’t hesitate to drop a fifty for a tank of gas, or $4 for a cup of coffee.  But when it comes to paying for $5 for an online service that actually delivers significant value - it’s a no-no.  I’ve been guilty of this for years myself, and now that I’m sitting on the other side of Paypal,  I see the light, and have started to pay for web services that I value.  

Why is this happening? Why is there a perception that everything online should be free?

Is it Google’s fault? Yes.

Is it the fault of VCs? Yes.

For venture backed companies the key to success is a large user base.  Monetization of that user base is a secondary priority. And if all else fails, you can get acquired for $1 billion.

VCs’ model is based on 1 home run. They don’t care if 99 of their portfolio companies fail, but as long as 1 gets sold for $1 billion, they are happy.  A decent double-digit-millions exit is not exciting to them. So when faced with a fork in the road:

a) build a sustainable business with a real business model, or

b) give the product away for free to grow as fast as possible (thus treating your free users as a marketing cost…)

… the incentive is to go for option b. Go big or go home. Or don’t raise money.

Is it your fault?  Yes.

Stop being cheap. Just because something is “virtual”, doesn’t mean it’s not valuable.  Ask yourself: “Is this more valuable than a vanilla latte?”

Freemium is bad for business

In the last couple of years I’ve heard a ton of startups (myself included) answer the “How do you make money” question with “Freemium, duh!”  There are a many shiny examples of widely successful freemium companies that killed it.  But they are exceptions, and unfortunately they set a bad example.  

As a business, you can’t pray that enough of free users will convert to paying customers.  The decision to go premium should be based not on philosophy, but on math.  You have to model everything out: 

- Say without freemium you get 100 leads and convert 10% to paying customers

- You think by going freemium you could grow your number of leads by a factor of X.  But of the original 10% paying users converts, 9% would now choose the free option, and only 1% would pay.  

- In this case you have to be damn sure that X>10 in order for this to not destroy your business. 

It’s hard to make money with freemium: http://www.fastcompany.com/magazine/147/next-tech-remember-the-money.html 

Freemium is bad for the users

I’m a happy user of my friend’s service.  The service is free, although I would happily pay for it.  Earlier this week I found out that my friend is killing the product because there’s no viable business model. I was pissed.  Here’s a product that’s valuable to me, but I can’t use it.  If only these guys just charged their users, there would be no problem. (I realize I may be an exception, and there’s no actual market for this service, but that’s not the point). 

The only real way for founders/investors to get ROI on free services is to sell the business. When a free(mium) service gets acquired for it’s technology, user base or talent, the users get an excited email from the CEO saying something like “We’re proud to become a part of the <insert large company name here> family!  Rest assured that our service will continue as is.”  This is the last time they hear from the CEO, who no longer gives a shit about the users.  So you get the same outcome as with my friend’s service which shut down.  If you’re not paying for the product, then YOU are the product.

No free lunch

This perception that stuff online should be free makes it harder and harder for new businesses to charge money for value.  If a freemium paywall happened in the real world as frequently as it does online, stuff would break pretty quickly:

“You can get 10 gallons of gas for free, but if you want more, you have to pay”

“Get a Big Mac and fries for free, but if you want a soda, you have to pay”

All these problems go away when we realize that it’s ok to pay for stuff we like. We need to apply the normal real world economics to online pricing.  Then companies can build products and charge a price commensurate with value.

PS: As I’m writing this, I’ve heard the same stupid ad on Spotify 5 times (seriously every 2 songs).  Time to drink the koolaid and pay for a premium subscription.

This post was originally published on http://www.sanebox.com/blog/death-freemium

In defense of Silicon Beach

As much respect as I have for Brad Feld and Mark Suster, I politely disagree with their points on the Silicon Beach discussion (here and here).  The actual name of the brand matters much less than what the brand has grown to symbolize.  Does anyone really associate Coca Cola with the coca plant?  Or Coke with cocaine? And wtf is Pepsi?  True Ventures is a great name, but the reputation they developed is much more significant to the value of their brand than the name. 

Personally, I don’t associate “Beach” in Silicon Beach with “not working hard”.  It’s just a nice place to live WHILE working hard (somebody should do survey on people’s perception of the term.)  I also don’t associate “Silicon” with “hey let’s be like Silicon Valley”.  It’s catchy, and it conveys the message brilliantly - we’re a tech hub that’s located on the beach (or 30-60 min away, depending on traffic).

Naming conventions are like nick names. They develop organically, and it makes no sense to fight them.  I don’t think it’s a good use of time to continue talking about this.  If you don’t like the term - don’t use it.  But people actually seem to like it.  There are over 600 members in our Silicon Beach Facebook group, and the name has really become something people rally around.  However, if tomorrow the name of the LA startup community changed to “Bob”, there would still be a ton of awesome entrepreneurs living here and working just as hard (while having as much fun doing it).

The best to-do app in the world

I’ve tried every task/project management tool known to man. From Franklin Covey and Asana to pen and paper.  I love the simplicity and versatility of pen and paper, but it lacks the aggregation and filtering.  And the apps like Remember The Milk, Things, Wunderlist, Asana, etc require you to learn/use their system, and are essentially a walled garden. If you decide to switch, you’re screwed (which is certainly the goal of most businesses).

After getting annoyed with all of them, I finally came up with this dead simple but exceptionally useful spreadsheet. It lets you input, prioritize, and plan both long term (for the month/week) and short term (today). I’ve been using for a couple months now, and I finally feel I’m ready to come down from the mountain and share the knowledge.  

This is how I use it:

1) put all the tasks that need to get done into buckets

2) mark important and/or urgent tasks with an X in respective columns and assign estimated time to complete them

3) mark if this involves other team members either with an X, or with their initials. (This field is helpful only if you’re working with other people. If not - just delete this column)

4) By using Excel/ Google Doc’s native filtering feature, I can quickly see which tasks are urgent or important, and look at the total hours needed to complete them

5) Finally, put an X in the Today column to mark the projects I want to get done (and have time for) today

Once a task is completed, I just move it to the “Done” sheet to keep track of my amazing progress.  

Here’s the link to the Excel file, and here’s the Google Doc. Enjoy and lmk what you think. I’d love your suggestions 

PS: I heard smartsheet.com is the closest to doing what I wanted.  But at this point I love my spreadsheet too much.