Friday, July 10, 2009

My Year of Hopefulness - Getting to Free

This week, Chris Anderson, editor-in-chief of Wired, released his book Free: The Future of a Radical Price. Odd that given its title the cost of the book is $26.99. It might have been a good marketing angle to give the digital book away for free. That aside, his point is well taken. Consider all the ways in which the concept of free services and goods have infiltrated our society. Craig's List, online news, Twitter, Facebook, Meet-up. Nearly all information on any topic anywhere on Earth is free. Google it. Bing it. Email an expert in the area you're interested in, and chances are you'll get a response.

This puts all of us as we consider our careers and accomplishments into a new frame of mind. What can I give away and what can I charge for? How long do I need to give things away before I see a return? What is the cost and benefit of free?

I'm at the very earliest stages of beginning a social enterprise. I've yet to spend a single penny on it, outside of the cost of my time. I've have friends who are experts in the field that the business is in, and I've solicited their feedback and gotten a lot of it, no charge beyond a heartfelt please and thank you. (I mean a very heartfelt thank you - the feedback has been really incredible!)

I've wanted to start my own venture for a while and the part that kept tripping me up was the pricing. How could I make money on these ideas? Chris Anderson's book showed me that we have to develop a new way of thinking about how we earn our living and the companies we build. The answer was very simple once I looked at it from the free point-of-view. I can't make money off of my idea, initially. Much of the value proposition for the enterprise relies on the services it offers being free. The money comes later when the services are rolled out to a wider, wealthier audience, perhaps through some speaking and writing engagement, or some incremental products that are developed as a result of the initial free service offerings.

The enterprise I'm interested in is in the education field so let's consider an example whom I greatly admire, Sesame Street. When I woke up this morning and flipped on my TV, I had forgotten that the last channel I watched last night was Public TV 13. So it was a wonderful surprise to have Elmo pop up on my TV this morning. Sesame Street set out to be a free service to urban children in lower-income families. They wanted to use TV as a way to better prepare pre-schoolers for kindergarten. Joan Ganz Cooney and other early believers did a lot of the beginning work on Sesame Street for free. Eventually, they had sponsors and grants, and now of course have a full licensing unit, DVDs and books for sale, etc.

What the example of Sesame Street, and many other businesses that start out on the basis of free, shows us is that many start-ups require patient capital. Founders often need to keep a day job. Those first customers require a pro-bono project to help a new company build a portfolio. Writers, artists, musicians, and young academics often have to give away their work for free to get some early publicity. In the new economy, free is the best way upward and onward to profit.

So if you're starting a new business, the first question we'd ask used to be "how can this generate money?" In the new economy, the first question may become something more like "how can we get people to try this product or service and then get them to tell many other people about it?" or "what can we give away for free in order to get people to buy an added product or service later?" The most exciting part of things being free is that it opens up the creativity valve for us. It requires new, innovative ideas. It frees us up from getting bogged down in the numbers too early on. It helps us keep our eye on the horizon ahead while also letting us make up the story as we go along.

1 comment:

PodSquadHQ said...

Good Thinking!

I've D'L'd the MP3, also looks like there is a free e-book edition...