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The FREE VERSION: Cloudbeat Panel of Business Freemium Pioneers

By Brian Jacobs

Yesterday, the Cloudbeat audience got a real treat: a world-class panel of pioneers in Business Freemium talking candidly about how they conceived their businesses, how they evolved over time and how they scaled explosively.  Of course, everyone at the conference opted for the premium version of the panel, paying a pretty penny for the privilege of seeing the panelists live and asking whatever questions came to mind.  Here I hope to offer a very limited free version of the panel for those who can’t travel to Silicon Valley or can’t justify the expense of attending live.

YouSendIt, Yammer and Echosign are among the largest and fastest growing freemium services available to business users today.  Having started well before the business model became popular, these companies were navigating in unknown territory. Today, they serve more endusers than any other company in their markets, and many of their business practices have been emulated by other Business Freemium providers.

I think the live audience would agree that the panelists were remarkably insightful and transparent on how they think about building Freemium companies that target business users.  I’m afraid that I’ll only be able to scratch the surface for the free users, but then, you get what you pay for.

  • Ivan Koon, CEO of YouSendIt, talked about how freemium companies must prioritize value delivery over value extraction.  The product or service must be so compelling that users want to share with their colleagues.  While free users don’t pay, they provide value by exposing a large number of other users.
  • David Sacks, founder and CEO of Yammer, commented that freemium services tend to work when there are two types of users, free and paid, and when the population of free users enhances the value to those who pay.  Of course, this works best when there is strong viral coefficient, which may be the most important lever for cost-efficient growth.
  • Jason Lemkin, founder and CEO of Echosign, believes that true freemium must have a conversion rate (free to paid) of less than 2%, because a greater rate implies that users are really just using the free service as a free trial.  Having recently been acquired and integrated into Adobe, Echosign is now seeing an explosion of traffic and the resulting paid conversion.

I’ll share one insight that was not discussed in the premium/live panel: these pioneering business leaders all share some common characteristics that probably align with the critical factors that lead to Business Freemium success.

  • They are really smart. It was very clear that each of our panelists could think on their feet, mentally model business drivers and abstract specific learnings to apply them more broadly.  Because Freemium companies have multi-stage conversion processes, it takes a sharp mind to understand how to manage and grow in a complex business model in a dynamic environment.
  • They are metrics-oriented. Every panelist had key business metrics in their head.  They commented on how they tweaked and testing to make small improvements that compounded over time.  This orientation is critical to Business Freemium success.  Freemium communities are dynamic systems, and these companies get extra leverage by measuring, testing, iterating and learning.
  • They are product focused. These executives spend a lot time with their product teams. They understand that for Freemium companies, the product is the value proposition, it’s the sales person, it’s the lead gen process, it’s the customer support rep and much, much more.

This is just a tiny taste of our discussion on Business Freemium.  If you liked the free version, then you should consider upgrading to the premium version next time.

Eight Business Apps That Will Change the Way You Work

By Jason Green

I need to start this list of the business applications I use every day with a confession. Even though I’m a venture capitalist who spends most of his time investing in startups that develop business applications, I am not a super early adopter of such apps. Many of my colleagues love to be the first to try out new programs, testing them as soon as they read about it. Not me. Not only do I lack the temperament, I also lack the time. I call myself a lagging early-adopter, inquiring about apps that seem to have the potential to add productivity my workday, and making them part of my routine only after I’ve heard a couple times that they’ve actually proven themselves.

This might seem like a problem for someone in my profession. Actually, I think my fast follower status is an asset as I decide on which startups to invest in. In Silicon Valley, we’re surrounded by tech buffs and early adopters enamored with the latest buzz. That buzz soon fades, but what remains are the apps that deliver real business value and productivity. In fact, most people are a lot like me, happy to use something if it really helps them get their job done, but unwilling to spend time with something simply because of good PR or a fancy award.

Now that you understand my show-me attitude, here are the programs that are either on my browser bookmarks bar or on page one of my iPhone. Not only do I use all of them pretty much every day, I can’t imagine doing my job without them.  I believe all these tools will not only get mainstream adoption, and as a result, have the potential to become very big companies.

Full disclosure. Several of these apps we at Emergence have an investment in. While this list may sound self-serving, as a firm we focus 100% on investing in game changing business applications, so it’s no surprise there is a lot of overlap. I’m an active user of all of them and I have no connection with several of the apps below… except for being an enthusiastic user.

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“The Death of McKinsey”: What Enterprise Cloud Companies can learn about creating insights from data

By Gordon Ritter

At Emergence we work exclusively with cloud-based companies that primarily serve business customers. Consumer internet companies have always been good at harnessing behavioral data from their customers to serve their customers better (and help themselves in the process). Many enterprise cloud companies have the same opportunity but have not focused on the importance of this data. Maybe it is because there is not the direct correlation between product changes and resulting advertising monetization. Or that the scale of user interactions seems too small to warrant focusing on it. Whatever the reason, the value of using aggregated customer data to help avoid churn, increase upsell and ultimately create a more strategic relationship with your customers is at stake.

Here are the three steps I encourage all our companies to take as they transform from being “tools” companies to thinking of themselves as “insight” companies:

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