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Succeeding with Freemium - Sean Ellis

In recent years freemium has become a leading startup business model. Startups use the pricing model to disrupt existing categories or to prevent a future competitor from disrupting them. But freemium is a difficult model to execute and requires a unique growth strategy. In this session, Sean will share lessons learned from helping to launch and/or grow 15 freemium businesses that are now collectively worth billions of dollars.

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Succeeding with Freemium - Sean Ellis

  1. 1. Succeeding with Freemium<br />Sean Ellis<br />July 14th, 2011<br />Founder & CEO of CatchFree<br />Blog:<br />Twitter: @SeanEllis<br />
  2. 2. Competing Against Free…<br />Hope nobody discovers free guy? <br />Spend heavily on marketing?<br />HBR “counter with free version”<br />2<br />
  3. 3. Agenda<br />Path to Freemium<br />The Freemium Loop<br />Freemium culture is critical<br />Free/paid breakdown<br />Marketing a freemium service<br />3<br />
  4. 4. 2003 - 2007<br />4<br />Entrenched 800 lbs guerilla<br />Great product/marketing<br />Disrupt/diff with freemium<br />Cashflow positive growth<br />$1B-ish on NASDAQ<br />
  5. 5. Google Search Volume 5 Years<br />
  6. 6. 6<br />Xobni<br />Dropbox<br />Eventbrite<br />Lookout<br />Socialcast<br />2008 - 2009<br />
  7. 7. The Freemium Growth Loop<br />7<br />Reinvest<br />Premium Upgrade<br />Seed a<br />Free User<br />Get word-of-mouth free users<br />
  8. 8. Freemium Culture<br />Least recognized necessity<br />Passion to spread “experience”<br />Patience to seed<br />Freeloaders are good<br />Protect culture – greed kills growth<br />8<br />
  9. 9. Free/Paid Breakdown<br />Free Version<br />Premium Version<br />Experience creates evangelist<br />Evangelists drive growth<br />Build relationship<br />Free creates need for premium<br />Understand needs<br />Solve problems with premium<br />9<br />Experience<br />Relationship<br />Understand<br />Solve<br />
  10. 10. Free is the MVP<br />Lowers complexity barrier<br />Lowers support cost<br />More version differentiation<br />10<br />
  11. 11. Marketing Freemium<br />Promote free version<br />Evangelists for free version<br />Revenue per 100 users<br />Allowable acquisition cost (less marginal cost)<br />11<br />
  12. 12. The Freemium Growth Loop<br />12<br />Reinvest<br />Premium Upgrade<br />Seed a<br />Free User<br />Get word-of-mouth free users<br />
  13. 13. Channel Discovery<br />Works with freemium economics<br />Addresses skepticism<br />Leverage good-will asset<br />Seeds freemium growth loop<br />13<br />
  14. 14. 14<br />
  15. 15. Sean Ellis, Founder & CEO<br /><br />Blog:<br />Twitter: @SeanEllis<br />