Morgan and I both believe that free services are generally paid for by using your data to sell other products. This is true for Facebook, Google, and many of the other most popular services on the internet. All of these ‘free’ services have costs and in order to pay for them they need to monetize something and that is usually the data of their users. In short, when something is actually free, you are the product. Recently, many questions about the ethical usage of data have arisen, and some entities, like the EU, have taken steps to curb what they see as abuses of user data. Services that promise to respect privacy have increased in popularity as people are becoming more aware of how they are being monetized. One of the most pressing questions when launching a startup that offers a service to people is regarding pricing.
The question is binary. Is it free? If the service is free, how are you going to monetize your users? If it is not free, how are you going to get people to pay for it? The reason I frame it this way is that corporations are fundamentally driven by profit. It does not matter what you offer, if you intend to be successful you must make money. The question then revolves around which of these two choices is best for your service. Being free abstracts the commitment between service and user. The service claims to be interested in providing something to the user but in the long run, its commitment will eventually lie to the methods it creates revenue. Sometimes these monetization schemes and the interests of the users are aligned. Sometimes they are not. The point is that the users are no longer the customers and as the saying goes the “customer is king”. This disconnect is not immediate and can often be ignored in the short term but in the long run, it will appear. But what happens when your users aren’t the customers, and the interests of these often-different groups diverge. The consequences of this can be seen most clearly in Facebook and the huge amount of data it collects and uses to target hyper-focused ads. Although this sounds okay at first the larger consequences of this activity have been felt across the political world in many recent elections. The consequences have also been felt in our lives as services that were once delightful to use become barely tolerable as they are designed to feed us advertisements while simultaneously capturing our attention for the maximum amount of time. These services are no longer bettering users’ lives in a fair transaction between customer and service. Free has consequences and for better or for worse, we believe these consequences are significantly negative to the point that Operand will never be free. The implicit and explicit contract you make when you pay us for Operand is that you are not the product, you are the customer. We never have to be beholden to another group of people for revenue. Even in the long run, this will be true. As Operand grows, it will grow profitably and sustainably where the security and privacy of user data becomes an essential component of serving the customer. For example, Apple is a company that is economically incentivized to protect user data and privacy because it sells you an actual product. To resell or abuse that data would directly harm Apple’s customers so no matter who is in charge at Apple they are beholden to their user’s interests of privacy and respectful use of data. We wanted to build that same economically guaranteed protection into Operand from the beginning. For us to build the features we want to provide we will need lots of personal data from our users. One of our fundamental assumptions is that by paying for Operand people will be comfortable sharing this data as they know that our interests lie in protecting and responsibly using their data. You don’t need to trust us through unintelligible legal documents or protest for the right to privacy because the rules of the game dictate that we protect your data and use it responsibly or you cancel your subscription. When the user is the customer the interests of the company and the user are aligned in a fundamental way.
At the end of the day, Operand is supposed to markedly improve your life by freeing your time. We simply couldn’t guarantee that Operand would always be in pursuit of this goal if it were free. However, the consequences of the decision to charge a price for Operand are significant. Users’ expectations are raised to a certain point when you charge more than Netflix and Disney plus combined. People are also less willing to sign up and more likely to leave as we need to provide at least $25 of marginal utility in a given month. The nice thing about these sorts of problems is that they can be solved by developing amazing new features. Building a great product can be our sole focus because of the pricing choices we have made.
Until next time,