Sachin Rekhi

Lately I've been spending time thinking about freemium business models and how best to structure them to maximize conversions. I believe we are still early in our understanding of these models and to date most of the available analysis has been limited to anecdotal evidence, one-off case studies, tips & tricks, and a few early overviews of what's been tried.

Despite this I think we are starting to see some interesting emerging design patterns and best practices coming together. I wanted to discuss one such design pattern, including examples of it's usage and potential limitations.

One of the segmentations that is often talked about among Chris Anderson, Eric Ries, etc. is dividing freemium plans into 3 main tiering types: time-limited, capacity-limited, and feature-limited. Canonical examples of each include 30-day trials for 37 Signals' Basecamp, storage space limitations for Dropbox, and mobile access for Remember the Milk, respectively.

One variant of capacity-limited freemium tiering that is particularly effective for products targeted at the SMB market is to scale pricing with customer success. What I mean by this is providing various premium tiers of your product that will become appropriate for your customer as they are more successful in their own business. Typically this means tying the tiers with capacity-limits that either directly reflect or proxy the customer's growth in their own user base or revenue.

As many of you know, I'm a huge proponent of on-demand computing as I believe it's the best starting point for most early stage web startups. Cloud computing allows a venture to substitute high initial capital expenditures for operating expenses that grow proportional to your traction. Equally important is its ability to flexibility scale and retract with the ebb and flow of your business. While it may make sense at a later stage to move to your own data center as you look to optimize costs, it rarely should be a priority in the tumultuous early days when you are still searching for product/market fit.

At my previous startup Anywhere.FM, we were an early adopter of Amazon Web Services in 2007. I've continued to be an early adopter of next generation cloud platforms as I'm always interested in understanding the bleeding edge innovations. Last year I initially saw a lot of promise in Google App Engine, but ultimately chose to abandon it due to its shortcomings. Just recently I tried the Rackspace Cloud, which is shaping up to be the fiercest competitor against AWS. I thought I'd share my experience with you.

Over the past two decades we have seen an evolution in the way we discover the content we consume online. I wanted to chronicle this evolution as well as offer a better way to take advantage of the next chapter in content consumption.

As many of you know, I'm a big proponent of open platforms and have spent much of my career designing, building, or leveraging open platforms and APIs. While we have seen explosive growth in social platforms over the past several years, I believe they are still very early in their history.

I wanted to put out my 5 social platform predictions for 2010, as I think we are poised to see another exciting year of innovation.

After last week's post I got quite a few folks asking me what exactly is an Entrepreneur-in-Residence. Since I didn't describe it in my previous post and there isn't very good information out there about the role, I thought I would provide an overview, it's benefits, and drawbacks.