If you had a great product and gave it away for nearly free, how long before you would have a big customer base?

This is one of the questions I sometimes ask when I am consulting to a new start-up, particularly one who thinks they are going to ‘disrupt’ the market in one year. In many cases I may have doubts about how good their product or service is, but in this exercise we assume that it is the best on the market and for some strange reason they can give it away for almost nothing, indefinitely (perhaps they plan to fund it via advertising, perhaps they plan to simply sell the business when the customer base is large, perhaps it is hyper-automated – let’s not worry about that). So, let’s assume you have a new way of testing advertising that is better than anything on the market and almost free (let’s say $100). How quickly would your business grow? The answer is, usually, not very fast. The following hurdles tend to inhibit growth: How are people going to know about your service? Few buyers read press releases or the magazines with ads in them, they don’t attend many conferences and only rarely go into exhibitions. Even when you begin to be well known in one market, you will have to start almost […]