Give Customers Something Worse

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Larissa MacFarquhar, in a 2012 New Yorker profile of Clayton Christensen:

In industry after industry, Christensen discovered, the new technologies that had brought the big, established companies to their knees weren’t better or more advanced – they were actually worse. The new products were low-end, dumb, shoddy, and in almost every way inferior. The customers of the big, established companies had no interest in them – why should they? They already had something better. But the new products were usually cheaper and easier to use, and so people or companies who were not rich or sophisticated enough for the old ones started buying the new ones, and there were so many more of the regular people than there were of the rich, sophisticated people that the companies making the new products prospered.

Very important thinking and one very viable way to attack an existing market, one I’m exploring right now.

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via Ben Thompson

Speaking of Underscore David Smith…

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Yesterday I linked to a Marco Arment article that referenced David Smith’s podcast Developing Perspective. David Smith (affectionately known as Underscore David Smith because of his Twitter handle) was working on a new service called FeedWrangler when Google announced they were shutting down Reader. His timing was perfect. For $18 per year you can have your RSS feed delivered to most any news reader, including one he wrote, and have an independent developer dedicated to making a better product working on it. I’m happy to pay my $18 per year.

But what David is doing now is really smart. He recently released PodWrangler, a podcasting app. He made some of the features available for free and more paid, but if you subscribe to FeedWrangler you get the entire app for free. I downloaded it this weekend. A very solid first release.

The business thinking here is brilliant. Get your customers locked in and provide those willing to pay an annual fee more value for their money. I hope it works for David. More of us need to find business models that keep us in business.

Underscore Price Dynamics

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Marco Arment in his blog post Underscore Price Dynamics:

I’m sure of one thing, though: the market for paid-up-front apps appealing to mass consumers is gone. If you have paid apps in the store, you’ve probably seen the writing on the wall for a while.

Spot on. He is absolutely right and it has been this way for a long time. I’m certain Marco was experiencing this with Instapaper and may be one of the reasons he decided to move on.

We are at the end of an era. The entire software business is adjusting and we, as developers attempting to make a living (at least) from our work, must adjust.

Joel Spolsky commented on Hacker News:

The only business models I want to work on any more have some mass-market component that is absolutely free, and a niche companion product that makes money off of the exhaust fumes of the mass-market component.

The last two businesses I started are Stack Overflow, which is free, where the careers business on the side makes money on the small fraction of Stack Overflow users who are looking to get better jobs, and Trello, which is free, but the business of providing administrative tools to large organizations using Trello can sustain the whole business.

This is more than just “freemium” or “advertising-supported.” Freemium and Ad-supported business models are special cases of this general model. The real insight is that the free product has a chance to reach an enormous audience which provides distribution/advertising/marketing making it trivial to go to market with your paid product.

What Marco is reporting here is that the old-fashioned “make something and get people to pay for it” business is much harder to pull off and likely to always be left in the dust by someone making the same thing for free, getting 100x the user base, and getting 1% of them to pay for some value added feature.

Very well said. We should all be searching for the same.

Make Money Make Art

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Fascinating first chapter of a book about Jim Henson and how he mixed art with capitalism:

The dance involves art and money, but not at the same time. In the first stage, it is paramount that the artist “reserves a protected gift-sphere in which the art is created.” He keeps money out of it. But in the next two phases, they can dance. The way I see it, Hyde’s dance steps go a little something like this:

1. Make art.
2. Make art make money.
3. Make money make art.

It is the last step that turns this dance into a waltz—something cyclical so that the money is not the real end. Truly, for Jim Henson, money was a fuel that fed art.

This so succinctly sums up how I’ve approached Infinity Softworks the past two years. We are about to release what I consider our art, Equals, but it doesn’t make money yet. So we’ve used our craft to make money. Contract work fills in the gaps. Hopefully over time, our increased skills and Equals itself will generate money, allowing us to make more art.

I grew up poor. At one point we were on food stamps. I never understood the relationship between art and money. In my early life I saw money as a corrupting evil. Over the last dozen or so years, though, my opinion has changed. Now I see it as an ends to a means, where the means is my ability to make more art.

Paulson’s Bullshit

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Hank Paulson in a Businessweek issue commemorating the financial crash five years ago:

I get asked all the time, “What’s the likelihood of another financial crisis?” And I begin by saying it’s a certainty. As long as we have markets, as long as we have banks, no matter what the regulatory system is, there will be flawed government policies.

Now, I’m not about to sit here and say that the financial mess was not a bi-product of failed government policies, but to insinuate that Wall Street was complicit, well, that takes balls. It was Wall Street that funneled money to Democrats and Republicans across government with the express intention of loosening regulation. It was Wall Street that played fast and loose with other people’s money, as always. It was Wall Street that fell under its own weight and then begged the government to bail it out.

Paulson’s policies failed the American public by propping up Wall Street. The banks should have been allowed to fail. Government should have then bailed out the American public. You know, those of us it exists to support: A government of the people, by the people and for the people.