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Would You Want It If It Were Free?

Written by: Brad Feld

Article Overview: The meme of “Free” is one again making the rounds. I expect it reignited when Chris Anderson’s new book Free: The Future of a Radical Price (available on Amazon for $17.81) quickly followed by Malcolm Gladwell’s semi-scathing review in the New Yorker titled “Priced to Sell. Is Free the future?” (I kind of feel like Gladwell wimped out on the review, even though I like Anderson’s point of view better than Gladwell’s.) This then created a predictable tussle in the blogosphere, the kind of which I find tedious and dull, so I avoided the rest of it.

Would You Want It If It Were Free?

The meme of "Free" is one again making the rounds. I expect it reignited when Chris Anderson's new book Free: The Future of a Radical Price (available on Amazon for $17.81) quickly followed by Malcolm Gladwell's semi-scathing review in the New Yorker titled "Priced to Sell. Is Free the future?" (I kind of feel like Gladwell wimped out on the review, even though I like Anderson's point of view better than Gladwell's.) This then created a predictable tussle in the blogosphere, the kind of which I find tedious and dull, so I avoided the rest of it. Over the weekend I saw two more blog posts on this meme. The first - by Fred Wilson titled Freemium and Freeconomics - is clear and well written (and free). It's then followed by an excellent comment thread. The second - by Marc Cuban titled When you succeed with Free, you are going to die by Free(also free) is a muddy as Fred's is clear (and the comments are much less interesting). Nevertheless, both are relevant and insightful.

Whenever I see this meme rise its head, I think of a line I use whenever I consider an investment or an acquisition of another company. "Would You Want It If It Were Free?" I learned this from Len Fassler, one of my early mentors who acquired my first company (fortunately he decided it was worth more than free). Before I make an investment, or support an acquisition, I sit quietly and ask myself "would I want this if it were free?" By this, I don't mean as a customer, but rather "would I invest in this at a $0m pre-money valuation" or "would I want 100% ownership of this company if it cost me $0."

Over the past 15 years, I've found my answer to this question to be "no" more times than I can remember. It often surprises me when I realize this, as up to that point in the conversation, investigation, or negotiation I'd been focusing on "the deal" rather than "whether or not I perceived any value in the company being discussed." When I reflect on some cases that I remember, I realize how my internal rationalization machine had kicked into high gear as I got excited about "a transaction". By taking the transaction out of my thought process, I could focus on the essence of value (or lack thereof).

Of course I've been wrong (both directions) plenty of times. But I can think of a bunch of situations where asking myself this question saved my ass or that of the company I was involved with that was considering an acquisition.

I realize this is a different version of free than the one Anderson, Gladwell, Wilson, and Cuban are discussing. But, if you step back and think hard about it from a customer perspective, it magically becomes relevant. Certainly lots of people "would try it if it were free", but do they actually want it?

Read this post in Brad's blog.

Related Articles
  When Free Is Just Too Expensive
  Sales Appointments to Sell Free Services
  3 Steps to Find “Freebies” to Add to Your E-book
  FREE isnt what it used to be
  Exercise in Freedom

Article Tags: amazon, chris anderson, gp, utf8



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