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3 hours ago
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When a launch flops - blame the marketing person?
Yesterday we launched Palpable AI with some generous encouragement... and not much else. As in, very few customers.
Partly this was a marketing glitch. My idiot marketing guy forgot about a web-component that read as "Coming Soon" on most peoples' phone.
I would FIRE that marketing guy except that he's me. And I'm the only one here. So I'm stuck with him for now.
But even without that, we have another big problem with launch: a very high price.
Price plays a role in launch response too!
One other contributor to our tepid day-1 customer count is our high price. Palpable costs $100/mo. Our rationale on price was: "yes, we're 5x more expensive than any iOS app... but we're 1/100th the price of a human personal assistant." We're banking on customers noticing the latter, more than the former.
Realistically, though, customers probably won't care about our clever pricing logic. Does that wreck our justification?
The genius of the "price higher" wisdom from Indie Hackers
If you listen to a lot of IH podcasts (which you should), you'll be familiar with the idea that technical founders "always price too low." Courtland and Channing give some compelling logic for this:
1. technical builders undervalue the tech because it's easy for them;
many tech founders follow an open-source ethos;
the big one: founders always have a moment where they realize they should raise prices.
When I'd hear this I would always promise to be different: "I will launch with a higher price, even if it feels uncomfortable."
So here I am.
What's missing from the "price higher' story
I'll admit to noticing an unstated pattern in all these "price higher" discussions.
Each "price higher" story stars a successful founder, not a failed founder. In the story of their success they started with a low price.
Yes, yes, they might come to regret that choice in some vague "I could have gotten more" sense. But how would they really know? The real subtext of all these stories is that, as an early founder, you're figuring things out as they come.
That is all to say that, maybe the low price at the start was a feature, not a bug.
A sidenote: I think on similar lines whenever I see an article like: "The 3 Most Common Regrets On Your Deathbed." In one sense, it is interesting people have common regrets when looking back. In another sense, that doesn't mean those people are fully 'correct.' You have very different circumstances and incentives when you're awaiting death. That might not be as applicable as we think. Put another way, it's a classic case of hindsight bias.
The decision to go "freemium" - matching your growth engine
I always find it hard, as a founder, to separate the universal startup advice (go talk to customers) from everything else (ads or word-of-mouth).
A freemium offering is squarely in the "it depends" category.
For example, if you have network effects, you have to have a freemium option. Heck, you have to have a free option. Acquisition is all that matters at first.
In contrast, if you're a quantum deeptech like my previous employer (SQC), freemium is horrible. Each sale is so expensive. Plus, you're only doing sales to prove to investors you can be commercial. Until you are unit profitable, there is no point trying to grow customers that much.
AI Tokens are Expensive - Losing to Competition is More So
The main aversion I have to freemium is the price of AI tokens. Right now, typical token usage for a user on Palpable is $50/mo. It can easily go higher. As a bootstrapped founder, that's a startling number. Our $100/mo has to cover both the $50/mo and the free-trials who drop out. Going freemium would only exaggerate the issue.
What's more, Palpable's base case does not scream "freemium" — we have a premium product without network effects. We need to spread either by word-of-mouth or paid acquisition. In normal times we might cater to rich, early-adopters who tout the product and seed a following. Our growth could lag some quick-and-dirty flameouts but we would win on trust and brand over time.
The problem: we're not in normal times, we're in a Wild West cat tornado led by Sam Altman and Elon Musk.
No one in AI right now, can claim to have a moat. There is nothing stopping Anthropic and OpenAi from doing what you do better and cheaper. The only reason they are not doing what you're doing is because they haven't gotten around to it yet.
The only way to survive them is to get far enough ahead, create a brand in your niche, and then wait it out while they fight one another (or acquire you). At some point, as a side-effect to this competition, they will cut prices on models that do enough of a good job, that our startups can all hit profit.
Until then, survival means growth and growth means freemium.
So how do we survive?
Kiss your IH Channing Interview Goodbye - Freemium Requires VC
Most of you will see where this goes. When you couple the expense of tokens with the need for freemium, the math just doesn't work for bootstrapping. Slow, organic growth is off thet able. Fast burn is the game. Unless you have a couple exits lying around, that means you need funding... fast.
Whereupon the only group who understands your risk/reward profile and, by implication, can value you appropriately, is a VC. It's not a philosophical position. It's just the math of cause-and-effect.
And so, that's where we seem to be headed: avoiding competition => brand position => big following fast => freemium => high token-cost => VC
Palpable's low-key goals for the week
Grab Haiku 4.5, which Anthropic promises is both cheaper and faster, for the same performance
Release a freemium version of Palpable
Go on IH and YC Founder Match... because speed is now the game
Check-in on Friday
