Jules Maltz, General Partner at Institutional Venture Partners (IVP) prefers to invest in second and third stage funding rounds. Past investment has gone to freemium companies like Zynga and Dropbox. He likes the Dropbox take on freemium where customers naturally grow into a premium product. He says freemium offers should avoid the “Ikea problem” where a product requires some assistance with its use. The market for a freemium product must be large since only a small amount of users will convert into customers. Jules is the co-author of the TechCrunch article: Should Your Startup Go Freemium? and the whitepaper: Freemium Software: A Guide for Startups”.
Mike Farr, Manager Medrio Scholars at Medrio explained the dilemma Medrio found itself in when trying to price Electronic Data Capture (EDC) and eClinical tools for complex clinical trials into the two major markets needing the services. The target markets were academic institutions and pharmaceutical companies. Despite strong efforts by Medrio, university research institutions would not pay for what Medrio was offering. However, Medrio discovered that when students and teachers left the universities and went to work in the private sector, those companies subscribed to the software. Medrio has free software for universities but charges for the same software to for-profit corporations.
Michael Horvath, Co-Founder and CEO, Strava says Strava is a way runners and cyclists can get into their best shape by sharing, comparing and competing with each other’s personal fitness data via mobile and online. The apps are freemium where the premium version provides extra features for analyzing and displaying collected data. Serious athletes don’t mind paying for this but different segments do like to pay differently. Runners and cyclists are different and Michael targets each market based on its feedback.
The Freemium SF Bay Area Meetup is all about the freemium model in SaaS, web, and mobile apps. It is the place where industry leaders share their insider views about freemium and all who want to know more can attend. Come and join us. We meet on the second Thursday of each month.
Visit our Meetup Blog, Freemium as a Business Model, where you can read more about what this month’s speakers had to say and read about our previous speakers. We also provide video recordings of past Meetups for you to watch.