Time to Fade 'Freemium' and 'Biz Dev'?

Too much free shit on the web and too many ‘Business Development’ people. If you call someone business development, you are giving them free reign to social network all day and take meetings. That’s just wrong at this point.

If you are starting a web business today, how about a ‘Chief Revenue Officer’ and ‘Chief of Burn Rate Control’ – that reports to the founder and investors

Too many biz plans with ‘free’ as the basis for building a business around eyeballs that will some day lead to ads that nobody clicks on.

I am not saying that ‘Freemium ‘, as Fred calls it, is dead. BUT, if you don’t have MAJOR VC backing or lightning strikes your genius application, than really, why bother.

I don’t have the energy anymore to start or back a business that relies on building eyeballs first and no click throughs later.

If WordPress had a ‘Chief Revenue Officer’, someone could at least be ‘FIRED ‘ for not calling me to ask me to pay SOMETHING, ANYTHING (I will pay $240 if someone from WordPress just picks up the phone and calls me to ask for it) for all the wonderfullnessessisness that this software has brought to me. If they are just expecting to me to pick up the phone and donate, I won’t.

Waaaaay to much revenue being left on the table by Web 2.0 companies and way too many Web 2.0 companies being started and funded without revenue number one on their mind. It is really time to start caring if you are a founder and a VC.

UPDATE – Since the above won’t happen, check out these 101 freebie sites that Business Week highlights …woooo :) .


  1. James says:

    great piece, Howard. Couldn’t agree more. Plus, I always feel better if I’ve paid for something when the time comes that God forbid I need some customer service. I’d much rather be a customer then than a user… The dollars represent a contract benefiting both parties: for me, assurance of product and service, for the company, P&L evidence of the value it’s creating.

  2. Interesting post Howard. I’m going to call you today for that $240 :)

    (full disclosure – I work for Automattic – we run WordPress.com)

    Overall, you definitely bring up some valid points.

    With the case of WordPress and this blog. You are running an open source piece of software that by it’s nature is free to download, and benefits from thousands of people around the world collaborating and contributing to this great blog platform. Quite simply, if it wasn’t open source it would not be as robust, simple to use, and powerful — and therefore you would probably be running some other piece of software.

    What we see is that there are hundreds — if not thousands — of companies out there running a business based on WordPress. We see a mix of design companies, development companies, plugin experts, companies that focus on support, and a number of other models.

    We list some of those companies here(http://automattic.com/services/wordpress-consultants/), and I’m sure you could find one company that would love to get paid to support this blog. In addition, we also offer support services for large companies hosting their own WordPress blogs (http://automattic.com/services/support-network/)

    As for the WordPress.com site. We’ve seen great success with the current model of a free blog service, with various paid upgrade products. With the kind of scale we now have — nearly 1.9MM blogs and 100+MM uniques/month — we believe we’ve taken a good approach and we now have a base to do some really interesting things that focus on making the blogging experience even better.

    keep the feedback coming :)

  3. Howard Lindzon says:

    ranaan – good luck getting my direct line unless facebook just sold it to you :)

    also my fingers and toes were crossed while I pecked out the rant therefore nullifying my offer :)

    thanks for responding and call me with an address to send the check.

  4. Howard Lindzon says:

    i think someone from wordprss or your list should be calling me and offering me insight. There has to be a way to make me a CUSTOMER as james outlines above and not just a user.

  5. i agree with you howard that there are too many companies that are trying to build something cool and hoping ppl will pay later. but i also agree with raanan that if wordpress would have charged people from day one they wouldnt have the great ecosystem of developers who have made wordpress as a whole better. Therefore I dont know if wordpress is a good example of why freemium should die.
    maybe all those free hosting sites are better examples.

  6. Howard Lindzon says:

    wordpress was a bad example actually and I know ranaan well so was just egging him on.

    i think you all know what I mean though.

    damn post cost me $240 bucks.

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  8. @ howard — your plan worked !

    But seriously, I do think the freemium model is working well for some companies out there like 37signals & flickr, and they would tell you that their growth is directly attributable to the free sampling strategy.

    For companies going free all the way, aggregating eyeballs and hoping to monetize via advertising is clearly a model that is attractive especially given how difficult it has been for some traditional media companies to attract large audiences online.

    My bet is that you’ll see more companies using a mixed model of freemium & ad monetization to keep revenues diversified and to be able to offer tiered services to different kinds of customers.

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  10. Alexander van Elsas says:

    Hi Howard,

    The web 2.0 free (but ad-based) business model is fundamentally flawed. It is fuelled from the wrong side. Not from the user value but from the network value side. It leads to walled gardens, and ad based network monetization. IN the end such a business model will fail. It is much better to go for a user value business model. Users will pay for value (although they have been severely spoiled by the “free” model). The million $ question is which service provider and which investor is willing to take on the current business model and start monetizing user value?

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