Startups and the Penny Gap

Great post from Josh Kopelman on startups and the “penny gap”:

The truth is, scaling from $5 to $50 million is not the toughest part of a new venture – it’s getting your users to pay you anything at all. The biggest gap in any venture is that between a service that is free and one that costs a penny.

Speaking of Josh, I like the following figure of his on the “new” cheaper funding cycle in online media companies:


  1. Mark Kraft says:

    I should also clarify that you want to give away as much functionality for free as you can reasonably afford, or it won’t be viral.