Bootstrapping an Idea: the Paid Beta | Bryan Helmig

As developers, we all have little nuggets of ideas. We want to build something people use and we want to build something people will pay for. But the path from idea to paid product is treacherous. At Zapier, we tried something just a bit different in the beginning: a paid beta.

At its core, a paid beta is just a more dynamic version of an MVP. The mechanics are incredibly simple:

You mock out a simple product or even just a promise. You let people make small, flat payments (think $1 to $5) for access and in return you continue building out core product features. Over time, the product will grow under the proper evolutionary pressure of what users will pay for.

It’s almost like a Kickstarter except you give users to your product right away rather than when the Kickstart is done. Just like Minecraft made paid beta with incremental improvement viable for indie games, you can do it with SaaS apps. We did it at Zapier.

This pattern actually works really well for the below reasons:

You force yourself into doing the right things.

It meets two pretty crucial components of a proper early stage startup: talk to users and write code. More importantly, since users are paying you, you know they are the right types or users and you aren’t just chasing a market made of tire kickers.

The revenue is a red herring.

The minor revenue is not the prize. The fact that someone will pay you at all for some promised product is the prize. Indeed, you could win bigger fans by just giving them their money back when you deliver their feature. Revenue potential is proven, so you can basically just turn on paid plans and make money.

It is easy to understand.

As a developer, I am basically taking on work from early users at a loss to guide my product development. As a consumer, I am paying for early access to features and a chance to provide feedback to make the app even better for me (and at a crazy low rate at that).

Eventually, you figure it out.

In time, new feature requests will become increasingly unique. Once you’ve reached this point you’ll know that existing features are going to be the core of your product. It’s time to move out of beta and put real plans in place. Treat your early adopters well.

You gather a crowd.

While working with customers, you’re building relationships and fans. These fans will be hard won and vocal about you and your products, you can trust them to treat you well. Remember, you can do unscalable things in the beginning.

Some final words of wisdom: the paid beta pattern tends to work well for B2B products. If you are trying to build a giant consumer social network that relies on network effects this may not be the best approach. But if you plan on charging for your product: charge from day one where day one doesn’t mean “launch day”, it means the very first user.

Posted April 12, 2013 @ 7:59 pm under Startups.