I don't think it's obvious at all. Because the question of how to make money was implicit in the mind of Satish:
(1) build beta version and get some users,
(2) improve product based on user feedback,
(3) charge money for the product,
(4) watch revenues increase
It sounds so simple. It's essentially the 37signals way, right? Build a product. Charge for it. It's so simple -- how can you possibly mess that up? And yet, the model above is simple, intuitive and wrong.
I think one of the key insights here is that you can have two groups of people who use your product: those who are enthusiastic about your product, give feedback and report bugs, and those people who are actually willing to pay for your product. In an ideal world those two groups overlap and it's easy to make money. What's often the case is that the two groups don't overlap very much, and if you listen to the wrong people you end up making a product that appeals perfectly to those people who have no intention of ever becoming paying customers.
It took me years to really learn this lesson, even though it was completely obvious in retrospect. In order to make a better product I should be talking primarily to my best customers (those who have subscribed to the bigger plans for an extended period of time), because the goal is to find more people like them and to keep 'em happy. If I listen primarily to the most vocal users the implicit assumption is that the most vocal users also happen to be the best (potential) customers. And that's a huge assumption that in my case turned out to be false.
(1) build beta version and get some users, (2) improve product based on user feedback, (3) charge money for the product, (4) watch revenues increase
It sounds so simple. It's essentially the 37signals way, right? Build a product. Charge for it. It's so simple -- how can you possibly mess that up? And yet, the model above is simple, intuitive and wrong.
I think one of the key insights here is that you can have two groups of people who use your product: those who are enthusiastic about your product, give feedback and report bugs, and those people who are actually willing to pay for your product. In an ideal world those two groups overlap and it's easy to make money. What's often the case is that the two groups don't overlap very much, and if you listen to the wrong people you end up making a product that appeals perfectly to those people who have no intention of ever becoming paying customers.
It took me years to really learn this lesson, even though it was completely obvious in retrospect. In order to make a better product I should be talking primarily to my best customers (those who have subscribed to the bigger plans for an extended period of time), because the goal is to find more people like them and to keep 'em happy. If I listen primarily to the most vocal users the implicit assumption is that the most vocal users also happen to be the best (potential) customers. And that's a huge assumption that in my case turned out to be false.