I’m meeting with an LA nonprofit today. One topic will be building a sustainable and scalable business model–an important topic regardless of tax status. It deserves white paper treatment (point me to one if there is one you like).
We’ll be discussing four dimensions:
- Inside or outside: will you serve formal education system or go direct to consumers? Important for product development is the extent to which iwt will be used in a compulsory or non-compulsory setting or something in between (i.e., after school, summer school).
- Adopters: who will be making the purchase and use decision: students, parents, teachers, schools, districts, states, or other organizations? Students and teachers have become much more important adopters in the last two years with the rise of free and viral apps.
- Pricing: the rise of free and cheap apps and open education resources has made this a challenging subject. As is becoming common in the cloud, we’re seeing lots of experimentation with freemium–free and/or open core with premium features.
- Product or service? Will the functionality (content, platform, app) stand on it’s own or will customers need services (training, implementation support). How much will be customized?
The biggest change of the last two years (post-tablet inflection) is the growing importance of surface area–widespread adoption of free/cheap apps and the potential it creates. However, offering a free product may require more capital (grants and/or equity) from investors that get free and social.
Lean start-up strategies help mitigate the risk. I’ve been impressed with a number of the Learn Capital portfolio company’s use of weekly hypothesis testing–micro trials that bring customer use patterns into direction setting.