Breaking Free

I’ve seen a few startups recently who want to have their customers sign contracts to get started.

The logic being that you can guarantee recurring income for your business (for the length of the contract) or you’ll have some recourse if the person fails to pay.

But there are two flaws with this thinking:

1. If your product is actually good, customers will stick around whether you have a contract or not
2. If the customer owes you less than a few thousand dollars, it’s not even worth your time to sue them

So if you are left with a contract that you’ll never enforce, why even ask for it in the first place?  All you’re doing is creating a hurdle to getting new customers to try your product.

Google Adwords is a good example.  Most agreements in the advertising world are still done with paper contracts, but Google decided to let anyone start advertising on Adwords in just a few minutes with no up front cost or contracts.

If you fail to pay your Adwords bill, Google isn’t going to sue you for $500.  It’s not worth their time.  They simply shut down your Adwords account until you pay your bill.  If two years later you are finally ready to try Adwords again, hey – no hard feelings – you can just pay it and your account is instantly re-enabled.

When I see an internet company asking for contracts up front, it feels like their product must not be very good – otherwise why wouldn’t they just let me try it knowing full well I’m likely to stick around?

Brian Armstrong

P.S. I certainly don’t mean to imply all contracts are bad.  For independent contractors, real estate, anything involving larger sums of money, etc it can make perfect sense.  But most internet companies are charging relatively small sums of money per person.  

P.P.S. Another way to look at is "what would it cost you if the customer doesn’t pay?"  Most internet companies have low marginal costs in their products (ad space, some CPU time, etc).  If you’re in a high margin business you can afford to give away all sorts of "free trials" in the form of people not paying after signing up.  It’s often worth it just to get your product in the hands of more people.

P.P.P.S.  Most companies (including Google) still make you agree to a "Terms of Service" by clicking a checkbox.  Don’t confuse this with a contract though.  The terms of service is usually there to prevent *you* from suing them, not the other way around, and it’s a sufficiently small hurdle that it probably won’t affect your signup rates.

Gotta have a little fun with it :)

I recently put up a project on 99Designs.com to get UniversityTutor redesigned.

I put up a $795 prize and got 46 entries from a half dozen designers

Most of the designs weren’t very good, but one designer stood out and I awarded him the prize.  His name is Jack Herbert and he is in the UK.  Below you can see the screenshots of his final design which I selected.

These are just photoshop images right now, so I’m spending the evening next few days turning them into CSS on the real site.  It should be launching soon.

Main takeaway: there is just no reason not to have a decent design for your web business these days.  For a reasonable price you can get some great design work done.

Until next time, keep breaking free!
Brian Armstrong

This is unfortunate. I no longer have access to the Google Group I use for support http://groups.google.com/group/feedmailpro on FeedmailPro.com.

It seems there is a known bug with Groups where people are getting unsubscribed. This happened to me, which in itself is no big deal. But when I re-subscribed by emailing the +subscribe address for the group, my ownership of the group disappeared!

This means I can’t moderate incoming messages and no new members can be added. The group is currently orphaned, without an owner, and there are pending messages waiting from customers that have gotten no response. I can’t even delete the group to recreate it since I’m no longer the owner.

I’ve posted to the Google Groups support forum to see if anyone could help. But it looks like they are swamped and I haven’t gotten any reply.

Googlers, can anyone out there help? Has anyone had better luck with an alternative platform for Q&A and customer support?

Former Google Group Owner,
Brian Armstrong