Blog / archive: 2017 August

By Jonathan Crowder on August 24, 2017

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We spend a great deal of time trying to understand which traits are the best leading indicators that a person has what it takes to build...

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By Kevin Stevens on August 24, 2017

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Two of the biggest inflection points for a growing startup happen when headcounts go from 10 to 20 people and...

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By Kevin Stevens on August 23, 2017

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Nothing is more critical to a growing startup than pricing strategy, and all too often startups leave too much money on the table by not charging enough which makes it difficult to take full advantage of the new value their product creates.  As Marc Andreessen recently said, if he could put one phrase on a billboard in Silicon Valley it would be "raise prices." My hypothesis on why startups currently have an issue with pricing is the recent (but now seemingly over) period of apathy towards negative margin growth. It conditioned startups to capture as much of a market as possible without thinking deeply, or at all, about pricing. While this gets a product into the hands of users, it does leave open the question of what buyers are willing to pay for it. To answer this question, it's useful to turn to Econ 101's first lesson - supply and demand - and more specifically, consumer surplus.  Why is consumer surplus good?  For one, you always want your customers to feel as though they are getting a deal.  More importantly, it's becomes possible to leverage that feeling to push out the demand curve for the core product, which is what any business really wants to accomplish.   While perhaps unintuitive, one of the best ways to do this is by "giving away" complementary products or features.  The result pushes out the demand curve for the core product, selling more at a higher price, while simultaneously increasing the consumer's perceived value (consumer surplus). Let's take a look at this concept in practice in two of the most popular technology business models: Enterprise SaaS and Marketplaces. Enterprise SaaS - Much like iOS and Android, Salesforce has an app store called the AppExchange. Consumers aren't charged for access to the apps but instead the large selection combined with easy integration of popular applications pushes out the core product's demand curve, allowing them to charge more than would otherwise be possible...

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By Jonathan Crowder on August 18, 2017

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Soon, for the first time in history, every human will have a reasonably powerful computer in their pocket...

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By Jonathan Crowder on August 18, 2017

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It’s not the person you’re advertising to because you wish they’d visit your site since you think your product would be nifty for them...

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