Using a Lean Startup Process to Build a Freemium Business

Madhu Narasa
CEO and Co-Founder-Snapwiz
Tuesday, October 20, 2015
Madhu Narasa
Freemium business models giving away one version of a product for free while charging for a more feature- rich version abound in the education technology space. But, even more common are those companies attempting freemium models that ended up at just 'free' when they failed to come up with a product educators would pay for. My company, Snapwiz, has created a platform for some of the largest educational publishers to create digital courses, complete with online textbooks, student forums, and adaptive practice for students. Snapwiz sells white-label technology solutions that are not free. Therefore, when we set out to create a new product for the K-12 education market, under a new brand called Edulastic, we wanted to avoid the 'just free' freemium pitfalls. Following a Lean Startup process has been critical to this success.

Get Out of the Building!
As Steve Blank exhorts, the first principle of the Lean Startup is to talk to customers and listen for their needs before developing anything. Solving a real customer need will help any business grow and succeed, but it's absolutely essential for a freemium business. In a freemium model, the product itself must do a lot of the marketing and sales work. So, the eventual product must be an obvious solution to an important customer problem.

For Edulastic we talked to dozens of educators in different types of schools around the country about their pain points in teaching, and especially the new pain points that other companies may not be solving yet. We found a lot of anxiety with the changes coming in curriculum and testing because of adoption of Common Core, which proved a good starting point for us.

Involve Customers in the Continual Development Process
Because the lean startup process means testing your ideas, we started by building a Minimum Viable Product for customers to evaluate. It solved the customer problem we had identified and only took a few months to build. With working (though minimal) features, the product solved enough of our customers' needs that they started to use it in their schools and classrooms. This helped us measure what worked and what didn't immediately giving us a new way of learning how to succeed which translated back into new ideas.

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