The ‘Gowalla Situation’

I think this is very true. At our startup, we use several SaaS for our daily operations like customer support, CRM and accounting. Getting used to these is a learning curve, especially accounting ones, so it is important to know if the company is going to stick around for a while

It’s like anything on the Net.  We come to expect it, then it is yanked away.  I wouldn’t blame startups: Google is the worst at this.  No more cached pages, no more simple ‘default’ that can be customized (it’s a mess of slow ajax by default that you can’t get rid of), plus Buzz and lots of other useful services shut down…  for no other reason than ‘it didn’t catch fire’ and only ’10000′ users.  We’re jaded.

FreshBooks

Mike, could you elaborate on what or how Freshbooks is an answer?  I’d love to hear your thoughts.

I’m curious. Did you have the same trouble with FreshBooks?

Any experience with, or otherwise exposure to, enterprise-level “solutions” would give you most of perspective you need to understand this issue.

I’m not be derisive towards those that haven’t, as that market can be is repulsively stagnant and frustratingly slow to improve, let alone innovate (a highly relative term, to be sure.)

But this post speaks directly and clearly to the point: change is costly. And assurances? Even more so.

That’s why a large organization won’t even pretend a product or service exists without a robust service level agreement. Which, of course, increases the cost, so much so that it not only exits the realm of “consumer-grade”, but enters a level of the pricing stratosphere that is almost incomprehensible the first few times you encounter it.

This is one of those classic cases of external costs. Lean startup and fast fail reduce the cost of providing a service, which customers LOVE. Yet they often lead to acquisition, founder burnout, or pivoting, any of which generally causes a lot of pain for customers who have come to rely on the service as it is.

In the end it’s a tension around pricing. I would ask that questioner how much more they would be willing to pay to mitigate the ‘Gowalla Situation’. Nothing is really free and if their answer is ‘not much’ then they don’t really value that stability.

Early in my career I was always amused when a vendor would trot out the “we are an $X million company who grew Y% over the last 5 years”. Now I realize that what they’re essentially saying is “we know you can find someone else who is cheaper, but we’re not going anywhere anytime soon”.

I’ve definitely felt that hesitation.

The fact that you care enough to blog about it made me just sign up for your beta…

I wrote about this very topic just before the Gowalla issue. I generally avoid a startup SaaS if it 1) doesn’t charge for their service or 2) doesn’t charge enough. I can’t bet my business on the fact that they don’t understand that businesses survive by taking in more money than they spend. Otherwise, I have to weigh my risks for adopting a SaaS that may not be around because they couldn’t gain enough traction in the market.

Full article: http://launchany.com/should-your-saas-startup-be-free/

I experience this same thought with every project I start. The human brain has fearful thoughts and tries to discourage from starting new things. I always try to revert back to, if you don’t risk trying you’ll never know if would have been successful. “Risk the fall, in order to fly”… Partly off topic, partly on topic.

There are lots of startups getting acquired mainly for Talent.

In Gowalla’s case the product was not solving any Real Problem. It was a wise thing for the founders to move-on for a new venture; as nothing significant was happening around Gowalla. Also Talent Acquisitions are normally bought over vested Stocks. So, Were given vested Facebook Stocks? I think so.

This Particular question will be best answered by the Founding team.

Are you dog-fooding it in your organization?
You must have needed this Solution so badly for your own needs; that you’ve built this product. Bootstrapped?
Are you giving out an API soon? Building a Platform says you are going to stay long term in the Industry.
Products come and go; Platforms Stay. Build a platform.

Is a strong community of Developers around this? who push Production code daily based on Continuous feedback’s?
Other less important things – Is the product open? Or some components Open?
(An influencing thing for the Dev community to try out FOSS software’s and start contributing).
Workshops and Freemium models?

Customer Testimonials and Big Customer names will matter too.

I always love to see Startups continue their Independence.

Interesting. I am in complete agreement with the take on commitment of founders – for the lack of which a startup is no more than a “project”. They die their own death.

Here’s a counter take on pricing. In my experience, barring a few, none of the early adopters asked me about what the pricing would look like when WebEngage goes public. We set the expectations right by mentioning that the product would be paid once it is out of beta. Your potential customers (adopters) know that you’ll be somewhere close w.r.t pricing to your competition. Early adopters have to have that extra urge to try your tool for a few thing that you do differently. And that is what sells and makes your product adopted. We waited for 6 months and extensively spoke to our customers to put a price tag to our service. Those who chose to stay are happily paying us today.

A sad reality. 

I have faced the same questions framed in different ways while selling our services to Indian businesses. One head of a pretty big retail chain told me “Indeed your product is quite awesome, but frankly I get a similar pitch every week. What is the guarantee that you will remain in the business when half of the people who have talked to me have just vanished.”

Frankly the chaotic scene of startups ecosystem (especially in India) reduces the credibility of them. When you are a startup and are struggling to grow, Trust is probably one of the important aspect you hope the business would have in you.

There is a strong “anti-drifter” sentiment around spending time and effort on the non-critical non-SaaS services (like Gowalla) that this article captures quite well: http://sahillavingia.com/blog/why-i-dont-like-lab-companies/ If you’re a SaaS startup, especially an app that increases exponentially in value, criticality and stickiness with use, this is an order of magnitude more important.

I don’t think there’s any doubt about the fact that communicating the intent and the ability to be around for the long haul is emerging as a huge competitive differentiator. The real question is – how do you, as a scrappy startup actually inspire this confidence in a potential customer?

My theory is, all else (design, customer service, quality of offering) being equal, a list of discerning customers built over time (and NOT a stellar list of investors) is the best social proof you can offer.

This is why I’d probably pick Basecamp over Asana if I’m looking for a project management tool today that I intend to use for a few years. http://twitter.com/#!/37signals/status/149214141360513024

Yes. I think the users are losing trust with the startup community. I sat in on a lecture about testing for market traction. The speaker suggested putting up “beta-sites” with no actual service written to see if the idea has “traction”. A “signup now and we will let you know when we are ready” kinda thing.

Well, ya. The first customer experience is basically based on a lie. The idea is tempting, but I would never do it.

Too much stuff like this is going on now. Too many people in it for the money and not enough in it for the customer and love of technology.

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