“Hard choices, easy life. Easy choices, hard life.” Jerzy Gregorek
Coconut, one of my portfolio investments, recently simplified their pricing. Coconut now costs either £3 per month or £10 per month. The free plan has gone. I’ll admit I was nervous about it (although I’m sure Sam got more flack than I did). Will people leave? Will the freelance community be up in arms? Will competitors hoover up users that ought to be Coconut’s? Surely there must be a free plan to get people into the funnel so they can be persuaded to pay later on (that’s what everyone else does, right?).
A useful trick to help my Thinking Slow brain is that I ask myself, ‘What does this move (that I’m initially nervous about) actually make me grateful for?’. Looking for gratitude rather than problems can be quite revealing: Perhaps Coconut can now get better users into the funnel rather than masses who might eventually convert to paid (but knowing that most won’t). That might help them focus on one group of users rather than two. Maybe they will save time by not dealing with people who will never, ever pay. It could also mean that Sam and the team can focus on building the features that serve the best kind of users; the ones that pay with their own hard-earned cash.
It’s not easy going against conventional thinking. Some people have told me that SaaS business models like Coconut’s must have a free plan. But what about SuperHuman I say? Their email client is $30 a month, take-it-or-leave-it (and it’s not like there’s a shortage of email clients to use). I’ve been a happy SuperHuman user for over a year. Same-but-different, there’s also MasterClass. It’s $180 per year and I was pretty annoyed I couldn’t find a free trial anywhere to test it out. I’ve since taken the plunge. And it’s amazing. Perhaps really good things cost money. Maybe doing the hard thing in the short term gets you what you want in the long term.
Cow, cow, cow, cow, cow… Purple cow!
And this brings me to Clubhouse and ‘Thinking Slow’ when it comes to founders. Clubhouse is a free app and it’s incredibly hot right now (with $100m in funding, of course it is1). To use it I had to wait until someone I knew invited me, then install it on my iPad (no Android or web app) and then I have to wrestle the iPad out of my son’s hands to check if there’s anything I want to listen to. It’s not easy. But what’s going on in Clubhouse is quite compelling. When I saw that Elon Musk was going to be in a house (or club, or room — I’m not sure what to call it yet) with Marc Andreessen and Ben Horowitz (the founders of A16Z and Clubhouse’s lead investor) I set my alarm for 6am so I could tune in (it was 10pm in California).
What I find intriguing and what I think might give Clubhouse a chance of being a breakout business (when many others are already writing it off) is that I’ve been thinking of what the founders have gone through to get to where they are right now.
Imagine being the founder of Clubhouse in some early Angel Investor meetings. “Add video!”, “What, no Android app? That’s a terrible idea”, “You have to allow users to record the audio for others to listen to later”, “Build a web app for those who don’t have iPhone”, “What, no website?”, “But if it’s invite-only fewer people can have it”.
With endless critics thinking they know better, what’s actually going on here? Clubhouse reportedly has $100m in funding. Couldn’t they find someone to build an Android app? Probably. So all this just makes me think the founders are worth taking notice of and learning from.
Thinking slowly…. as Angel Investors we talk to founders about what they’re building and sometimes get so excited that we want to show how smart we are in the hope we can invest. So it can be tempting to chip in and give ideas. The easiest ideas to give are additions to a product that aren’t already there. The more difficult thing to do is to stand back, think, and notice what’s not there and why that might be…
To be focused: Remember Sacca
“Simplicity is hard to build, easy to use, and hard to charge for. Complexity is easy to build, hard to use, and easy to charge for” Chris Sacca.
All this reminded me of This Week in Startups Episode 291. In it Chris Sacca talked a lot about Twitter, it’s simplicity and how that was no accident. Sacca said that the beauty of Twitter is what’s not there and that’s what’s made it last. I reckon it takes a lot of ‘Thinking Slow’ and extreme confidence from founders to say ‘no’ to adding things here and there because people say they ought to be there, or because an investor has a bright idea for a feature, or because ‘everyone else’ has it.
Focus, Focus, Focus
Will it work out for Coconut or Clubhouse? I hope so, but I don’t know. What I do know is that it’s worth paying attention to alternative thinking. I love founders making bold moves that look even better after some ‘Thinking Slow’, and I love when founders see that long term success comes from short term sacrifice.
Plus, isn’t this the kind of non-obvious, contrarian boldness and independent thinking that we’re looking for as Angel Investors?
Might be an idea to do some Thinking Slow and back a few.
Important: None of these posts are investment advice. If you are thinking about investing you should seek the advice of a suitably qualified independent advisor.