The Grief of Growth

Liam (name changed) runs an online business where he sells digital goods on a subscription basis. After approaching nearly $1 million in revenue, he experienced a mindshift. The shift was subtle and unconscious; he didn’t realize the harm he caused until later.

On the side, I consult for Liam’s company. For weeks, I tried to convince Liam to test changes on the site that could potentially increase sales to no avail. I couldn’t understand, why didn’t he want to make more money? Or at least try? Wasn’t that why he was paying me?

Exasperated, I exclaimed, “You’re essentially telling customers to cancel during every step of the process! And then they do. How can we ever expect to grow revenue?”

Liam paused. “You know what, Rebecca,” he said. “When we came close to $1 million in revenue, I thought, is this bad? Are subscriptions evil? Am I taking advantage? Is my business model inherently wrong?” His answer was to place detailed instructions on how-to cancel everywhere on his site.

More than 150,000 people have downloaded Liam’s products. He’s a smart guy. He’s also part of the Google generation where “Do No Evil” is the motto for life and business. Increasingly, that means making stuff, but not making money.

Freelancer Amber Adrian (disclosure: she works for me through Alice) recently launched a series of essays on perfectionism. Her pricing strategy was “pay-what-you-can,” with a suggested price of $5.

“I wanted to get this into as many people’s hands as possible,” she said, “to pave the way for a bigger package that will be a set price. I’m hoping that people find it super valuable and share it around and that brings in more people.”

She told me readers paid more than what she would have charged, but I still cringed. I had heard about the amount of work she put into those essays. Not to mention, she already wrote (for free) about these topics on her blog. If she believed the essays to be super valuable, why not come out swinging with a price that indicated that value?

The truth is, unless you have an extremely wide reach, discount or zero pricing does not work. And hardly anyone has that kind of reach. The majority of us (start-ups, freelancers, small business-makers, entrepreneurs) are in markets with smaller audiences and niche targets. And that means premium pricing.

Charging for your work or products, however, just doesn’t seem to jive with the so-called basic rules of the Internet. Somewhere along the line, Free! became an acceptable business model, and revenue and sales became a sign that you didn’t get how the new economy worked. Suddenly, we’re afraid to make money.

“It feels weird to be selling to my blog readers,” Amber says. “The lines are a little blurred and I’m working to draw them more firmly. I’m very emotionally attached to my blog and it feels weird to try to turn it into a business space.”

But the lines don’t get less personal when you aren’t marketing to friends. Liam spoke to me about how his customers are from modest means, and he is often more concerned that his customers save money, rather than he make it himself. Even with a healthy level of success most would be envious of – and a growth rate a fully-backed and funded start-up would salivate over – Liam is often worried. And he seems to feel bad and apologetic at his success.

A good many of us want to start and grow businesses (or nonprofits or blogs or something). But the majority of us cannot. Our minds won’t let us. We put up all sorts of barriers and paradigms that tell us no, this isn’t right. Even if you manage to get an idea off the ground, your negative nellies will tell you that the product isn’t great/has bugs/isn’t ready/is stupid and the big one: you’re not good enough.

We all tell ourselves these invisible scripts every day, and they go into overdrive when we try anything new. We literally have a physical and biological reaction that tells us to stop, back away and let it go. Financial expert Ramit Sethi has an exercise in one of his courses where he asks people to identify these scripts. Here is a sampling of what people say:

What will I do if I succeed? Do I deserve to succeed?

Not good enough – Just writing those words makes me irritated as hell. But that’s what I battle with.

What skills, expertise do I have that someone will be willing to pay top dollar for? I’m afraid I’m just not good enough, special enough, have great enough ideas to warrant the financial life I so desire.

And the fear of not being good enough, or un-deserving, does all sorts of weird things to us when we try to implement our ideas. We decide it’s more important to be right, than effective (we don’t want to fall flat on our faces, after all), and we move forward with assumptions that are clearly incorrect.

Despite the current obsession with tracking, testing, metrics and analytics in the start-up world, we still primarily make business decisions based on emotions, not data. Business risk doesn’t depend on your conversion rate, but what you say to yourself in your head.

“It did feel more comfortable for me to do pay-what-you-can,” Amber said, “because I’m still a little uncomfortable with this whole Pricing My Work thing. There’s definitely some fear involved.”

For Amber, having people pay-what-they-could helped her plow through that fear. “Most people ended up paying the suggested $5, but a large number paid in the $10 range,” she reports. “One person even paid $50. Only one person paid less than $5, at 99 cents.” Amber plans to charge upwards of $50 for her next product.

As for Liam, I asked him to reframe his worldview. Instead of worrying if he was ripping people off, he should focus on providing as much value as possible to his users. If you are providing value, there is no reason not to charge, no reason to feel bad. We don’t need to be so wrapped up into “do no evil” that we talk ourselves right out of profit.

Instead of our emotions plowing us into despair over success – or potential success – we should focus on the fact that growth, even and especially financial growth, is healthy. Of course it will take work. Things will change, and with it will come more responsibility and expectations, but only if we can accept that we’re worthy and good enough to provide mad value and make mad money in the first place.