written before about the fractal relationship between running a startup and running a venture fund -- here's another example:
Freemium pricing is one of the most powerful customer acquisition strategies in the software business. Many billion-dollar businesses have been built (think Dropbox or Evernote) by giving away a significant chunk of their overall value proposition completely free, no strings attached.
This model has more or less won the day in mobile app marketing as well -- most top-grossing apps are "free to play", relying on in-app transactions for premium services to drive lifetime value.
I've been reflecting lately on what I've learned over the past four years as a "professional" venture investor, and the freemium parallel strikes me as pretty accurate description of how VCs invest their most precious resource -- their time.
Most of my calendar slots are filled by people I've never met -- first-time meetings with entrepreneurs, co-investors, or other folks (academics, enterprise leaders, city and state government officials) who share my passion for early-stage innovation and community development. Most of these meetings don't "go anywhere" -- meaning they don't lead to investments, close working relationships or other obvious outcomes -- at least not in the short-term.
But every one of these meetings is an opportunity to forge a connection that may lead to a positive outcome in the future. And nearly every meeting results in additional connections -- each of us acting as a "human switch" and offering introductions from within our networks that might help the other along their journey.
This kind of no-strings-attached relationship-building and connection-sharing is the "freemium" part of my working life. And it's a very big part of what I do. The benefits of it aren't always obvious in the short term, but it's easy to look back over the past four years and see how powerfully this investment in people and relationships has become the foundation of my ability to create value as an investor.
Last night I was honored to receive the "Investor of the Year" award at the annual Seattle Startup Awards (created by Marcelo Calbucci and now hosted by the amazing team at GeekWire). It's definitely not awarded based on financial success -- I still have much to prove on that front -- but as Rebecca Lovell said in her introduction of the award, it's really for being the "believer of the year."
I *do* believe -- with all my heart --in founders, in entrepreneurship, and in the capacity of digital innovation to make a better life for people in our community and around the world. And if that's what the award is really for I'm even more grateful to receive it.
Don't get me wrong: "Freemium" investing is still investing -- it serves the the capitalist master of turning money into money. But the more I learn about my journey as an investor, the more I appreciate the wisdom of Yvon Choiunard's parable about Zen archery -- hitting the target is just a by-product, not the work itself.