The quiet pivot
March 23rd, 2014 strategy
In the last 6 months, we’ve quietly shifted the direction of Buffer. Our adjustment is now almost complete and we’re charging ahead with our new vision. It’s interesting to reflect on how we came to realize that a change was needed, and how we went about finding our new path.
The original vision
The earliest idea of where we wanted to take Buffer was that we aimed to be a sharing standard:
Our vision is to become a new sharing standard across the web and apps, and to set the bar for great customer support.
For us, the idea with this was to be a very widespread consumer product with a low price point. We had been inspired by Evernote and casually used the phrase “The Evernote of Social Media” to describe Buffer. Evernote at the time had tens of millions of users and its business model was super simple: an optional pro version at $5/mo.
In the beginning, we had a $5/mo plan and a $20/mo plan, in line with this philosophy. Over time we adjusted our price to $10/mo and dropped the higher priced plan. Interestingly, for some time we had a $100/mo plan and people very readily paid that to manage additional social media accounts and team members. At the time, however, we were entirely focused on becoming a widespread tool and decided we must stay simple. We ditched the higher priced plan and attempted to scale as a platform rather than adding more power to the product itself. If we wanted to be a button across the web and apps, it had to be a simple idea.
What we learned attempting our original vision
In some ways I wish we had perhaps realized sooner that our vision to be a sharing standard was not going to work. At the same time, we gained many benefits by pushing ourselves to be a widespread product used by many individuals and small businesses.
Growth slowed, conversion rates dropped
We made a lot of progress in becoming a sharing standard. We made partnerships with Feedly, Pocket, Echofon, Reeder, TweetCaster and many other apps and services. I believe these integrations are still incredibly useful for our users (I personally am using the Feedly and Pocket integrations daily).
One of the key learnings we had in fulfilling a large part of our original vision was that partnerships and integrations rarely give you distribution. A key part of this vision working for us was tied to the integrations leading to many new Buffer users. We certainly got a good number, however we always had much more success with signups direct from our own web and mobile apps.
Not only did we not get a significant number of new users from the integrations, we also observed a drastic drop in conversion rates (to active users and eventually paying customers) for people who came from 3rd party apps. In hindsight this is not too surprising, since these users are not in that app primarily to use Buffer.
The benefits of freemium
While we found many flaws in our original vision and eventually decided that we needed to make an adjustment, I couldn’t be happier with the result of that journey.
Luckily for us, generating revenue was always a key focus (we charged from day 1). Therefore, even though we focused on having a wide reach, we always looked at our conversion rates and cared about revenue. In the journey of growing to 1 million users, we grew to significant revenues, to the extent we could be profitable and not have pressure to raise further funding.
In addition to building a profitable business, we have a true freemium / SaaS scenario and scale to be able to grow by understanding user patterns and running a/b tests and other experiments. We have 2,500 new users every day and consistent conversion rates to our $10/mo awesome plan as well as $50+/mo business plans.
I’ve observed that as startups grow, they tend to move up market. They introduce more powerful offerings and charge more. They start doing enterprise sales. We’re even on this journey now. At the same time, it’s incredibly powerful to have a free or lower priced product and have a large top of the funnel. We’re lucky to have both, and it’s much harder to try to fill that room at the bottom later.
The valley of death
Something that’s become increasingly clear to me as I’ve traveled this path is that I think there is a dangerous middle ground between trying to be super widespread and mainstream (and monetizing via ads) and focusing much more on value and power (and monetizing via subscription payments).
The way I see it, is that if you want to monetize through ads you probably need 100M+ users. If you want to build a solid freemium offering you only need a few million users, if that. Pure SaaS and it’s even less. But if you build something that people won’t pay for directly and end up with only 10 or 20 million users, you might be in a tough spot.
We’re now completely focused on building a world-class freemium and SaaS product to solve problems around social media.
The new vision for Buffer
As a result of our learnings and reflection on the slowing growth, Leo and I had a series of conversations towards the end of last year and decided on our new vision:
The vision for Buffer is to be the simplest and most powerful social media tool, and to set the bar for great customer support.
When we decided to make the change, we chose to approach it in a lean way. We didn’t talk too much about it until it really started working. To begin with, we simply brought back higher priced plans and reached out to some key customers hitting the limits of existing plans.
Fast forward to today, we have over 1,000 business customers and it already contributes 15% of our revenue. I’m excited about our new path. We’ve found it is incredibly fun to work with larger customers who have real problems and a need for a powerful social media solution.
Photo credit: takasuii