posted20/01/10
Last week, the entire Creately Team (except Graham - we missed you mate) gathered in our new office in Colombo for a week long strategy and planning session. We reflected on the past year, our successes and learnings, evaluated the market and primed ourselves for an exciting year ahead in 2010. We talked a bit and drew quite a lot during the week. We’re firm believers of visual thinking and communication and ended up capturing most of our thoughts and findings in mind-maps, concept diagrams and the like. Over the coming weeks, we’ll share some of these diagrams that we feel can help other young startups like ourselves do better in 2010.
Today, I’d like to share a Concept Map that Chandika put together - Critical Success Factors for a Web Startup. It captures key elements of a Startup’s operations that need the Entrepreneur’s attention and how these elements impact your success as a web startup. With so little time and so much to do - anything that helps keep an entrepreneur focused is very useful. So if you’re like me, you’ll want to print it out and pin it someplace you’ll see it everyday. Click image to enlarge 
What else do you think should go into the diagram? Did we miss something crucial that you’d like to add? @charan
posted10/01/10
The great thing about working in an Internet start-up is the learning we get to do every single day of our lives. We don’t always know the right answers to every question we face, but the very nature of the Web lets us try out new ideas and quickly adapt them to achieve the best results for our online businesses.
The Big Kahuna Question
The Cinergix team faced this ‘hard’ question 3 months ago when we launched our online diagramming service, Creately, to the public. After being in beta for almost a year, where we spent a lot of time and effort in engineering, we were faced with the question of how much to charge for our service. Of course we had tons of ideas and projections in our business plan, but now that it was finally time to start generating an income, we weren’t exactly sure how much our customers should be paying for our collaborative diagramming application.
Our customers’ feedback and reviews told us we had a service that was loved and valued by users, but we struggled to quantify this value. Creately was being used in small businesses, software and design companies, startups as well as by students from all around the globe. We felt Creately would be valued differently by each group - depending on what they used it for.
A web design agency using Creately to work collaboratively on a Web Site project with their clients receives immediate economic value by shortening the turnaround time of designs and raising customer satistfaction. This would make Creately a valued tool - in essence allowing us to charge a “Premium” to this customer. But a student using Creately may not see such immediate economic returns, and hence would not be willing or able to pay the same price.
Faced with this dichotomy of users and our desire to ensure Creately remained accessible to everyone who needed it, we devised a simple Pricing Experiment that would help us better understand Creately’s perceived value to our customers.
The Experiment
We set up a new Creately Plus plan and decided we would let our customers choose how much they would pay for Creately each month. We called it the “Pay What You Want” offer and set about putting the plan into action.
We set up a simple Upgrade page (see screenshot below) with sample prices of similar diagramming applications, and launched it with a Press Release and a newsletter to all our beta users. The experiment would run for 2 weeks and we hoped to get a better sense of our customers and how much each of them valued Creately.
Marketing Sequeway
This also proved to be a bit of a marketing coup. I thought we had an interesting story with our PWYW plan, so instead of putting out a Press Release announcing the launch of Creately - we pitched the unique “PWYW” pricing angle. This lead to stories on TechCrunch, TheInquirer.com and a host of other blogs. We didn’t realise this at the time, but not many people (besides Radiohead) have tried this before.
The Results
I would be lying if I said we were not pleasantly surprised by the initial results of our experiment. This along with the publicity we received convinced us to continue to run the pricing experiment for 2 months instead of the planned 2 weeks.
We received a wide range of offers from $1 (the minimum allowed) to $100, with the mean ranging between $4-$5 and a median of $3.
- Customers who paid $1 were mostly new users who’d heard about the PWYW plan and signed up on the first day. This group of customers was also the most likely to cancel their accounts over a period of time. Many of them did not use the application intensively and would have been fine with a Free plan.
- Customers who paid the Mean Price of $4-5, have made good use of their Creately accounts, including creating multiples diagrams and publishing them. These customers come from a diverse range of industries including small businesses owners, marketers, teachers and students. These users have shown less propensity to cancel their accounts as they were extracting good value from their accts.
- Customers who paid more than the Mean Price provided the most valuable insights. These customers incorporated Creately into their work and business processes and derived significant value from Creately’s collaboration capabilities. Customers in this group included tech-savvy small businesses, software teams, design companies, Webmasters and business consultancies. This group made the most use of Creately to collaborate with co-workers and clients, valuing our visual collaboration platform to communicate and solve real business problems across cross-functional teams, instead of simply using Creately as a diagramming tool.
Another very interesting point that stood out from our experiment is the difficulties that so many of our users faced with completing their subscriptions with PayPal. The complaint emails as well as large percentage of abandoned transactions - forced us to work on alternate payment methods.
Lessons Learnt
Understand your users
We’ve learnt that its very important to understand who your customer is and why someone’s your customer. No two customers are the same so it’s important to learn what each type of customer gets out of your product. This is important if you want to stay relevant to your most valuable customers and helps you focus your marketing and development investment to maximise your returns.
Give Customers What they Need (or To each his Own)
We are even more committed to the idea that Creately delivers differing levels of value to our customer. We don’t want to forgo any customers and will need to continually work to ensure Creately is available where its needed.
Sustainable?
The PWYW scheme did a good job in helping us gather invaluable data on our customers, but may not be sustainable over a long run. This is due in part to the fact that although we ask people to be Fair, not everyone is. Also, for a startup with limited resources, it becomes very hard to do any real business planning & projections when you add variable pricing to the mix.
Action Plan
We’ve been working on a set of actionable activities that we worked out as a result of our experiment.
- Make it easier for teams to work together on our visual collaboration platform, by introducing Team Projects.
- Introduce Pro Plans that deliver greater value to customers who use Creately intensively.
- Focus on developing a clear market position that resonates with our high value customers.
- Put in place a new payment infrastructure to replace Paypal. This will be announced shortly.
- Institute a Creately Scholarship programme to give access to charities, schools and colleges at deeply discounted prices.
Conclusion
We may not have fixed every concern we had, but this experiment has definitely helped us identify our strengths and understand the market response to Creately. Even though we gave out quite a few Creately Plus accounts for $1, we believe the data we collected over the 2 months has more than paid for itself in terms of lost revenue.
Tell us what you think of our findings. Would you have conducted this experiment in a different way? We’d love to hear from any online service that’s faced this question before.
Some Good References on Pricing Strategies for Startups
posted19/11/09
We have just had some unscheduled downtime with the Creately service due to a database change not going as intended. The issue started at 5pm GMT and was resolved at approximately 11pm GMT.
The change was tested in our development and testing environment and even with the best change management it seems things still go wrong. The issue affected a change to the main diagram database structure that was required to facilitate our recent introduction of Team Projects to Creately.
Sorry for the inconvenience caused and rest assured that we have found the root cause of the problem. We have put steps in place to ensure this doesn’t happen again in the future. We will also be introducing extra redundancy to ensure that next time the switch over to the backup database is even quicker.
Creately is now back to normal, but if you face any issues, please do let us know.
Happy Diagramming and thanks for your support.
@nick_foster
posted20/10/09
On Thursday night I went to Ideapitch ‘09 with was run by Student Entrepreneurs | Agents of Change. This was the finals of the IdeaPitch ‘09 events. There were 8 student groups pitching in two categories. The first being for plain ideas, and second for established ideas or businesses.
There were some fantastic ideas, my favourites being Heart Park (compassionate car parking) and iWannaTutor (social tutor and student network). Special mention to Green Wall Garden, this is very much what apartment dwellers need to grow their own fresh fruit and veg - although its pretty expensive. Finally 37tweets (you might be able to guess where they get their inspiration from) have an interesting idea, and if they work very hard they could well be on the right track to achieving their dream. Take a look at the final results.
Beside the pitching there was also a chance to network with the other attendees. I met some interesting people, all of whom have great ideas. These events always remind me that there are so many great ideas around.
The nicest surprise of the evening was to run into an enthusiastic Creately user. As you know Creately appeals to everyone and it is no surprise that we meet Creately users in all sorts of locations and situations. This user is a student at Monash University where he and his friends had used Creately to collaborate on a piece of course work for their university degree. He said he found it quick to use and it made it much easier for him to finish his coursework and get it handed in on time. It is always fantastic to meet Creately users in person and get that first hand feedback. After all, this is part of why we made Creately and why we want to make it even better. Hearing how much people love it and how it helps them provides us with the impetus to carry on and strive to be the best diagramming tool and number one visual collaboration business.
We would now like to reach out to all our current and future Creately users and invite you to meet up with us to discuss your Creately usage and to get your ideas for future development and usage. We would especially like to meet those individuals and organisations that are using Creately to help with software development or web development. So if you are based in Melbourne, London, Colombo or Jakarta or the surrounding cities please email us and we can arrange a meet up in the coming weeks (or perhaps even a short chat on the phone). If you’re not based in these cities please email us or leave a comment, we’d love to know how you use Creately.
@nick_foster
posted15/10/09
Perhaps you have been wondering who the people behind Creately are? Or perhaps you haven’t. Well in case we’re piqued your interest, you can now check out our brand new About Us page and finally put a face to the name on the support email or enquiry email we have answered for you. Charan has done a great job putting the page together.
We have also provided a map of our office locations so you can also get an idea of where in the world we are.
Finally we have some ideas and pointers for those of you who want to talk about Creately to your business or user group in your organisation or perhaps even just your friends.
@nick_foster
