The Power of Free - For Entrepreneurs


Hatched by Glasp

Jul 22, 2023

5 min read


The Power of Free - For Entrepreneurs

One of the most powerful techniques available for customer acquisition is giving away a free product or service. The concept of "Free" or Freemium business models has gained popularity in recent years. The trick to doing it right is to ensure that the product or service being given away for free is of very high value to the customer. This not only results in high customer satisfaction but also increases the likelihood that they will tell others about your product or service, leading to viral effects.

Entrepreneurs and executives fall into two camps when it comes to understanding the power of Free. The smart crowd realizes that in a typical business, the biggest expense is sales and marketing. They recognize that offering a free product or service is an extremely smart way to acquire customers at a low cost, which can then be monetized in a different way. On the other hand, there are those who are so focused on extracting the maximum dollar out of every customer that they fail to realize the benefits of offering something for free. This approach often leads to slow and expensive customer acquisition, resulting in a small footprint or market share.

A great example of the power of Free is the high-priced acquisition of SpringSource by VMWare. Although VMWare overpaid for SpringSource based on revenue multiples, the real value of the acquisition lay in SpringSource's large base of developers inside enterprises that were strongly committed to the Spring free Open Source framework. This highlights the importance of market leadership and the recognition that market leadership is worth a significant premium over niche players that may have more revenue.

The free strategy not only helps in acquiring a larger customer base but also results in customers becoming proponents for your company. By offering something for free, you can build a loyal customer base that is more likely to spread the word about your product or service. This word-of-mouth marketing can be incredibly valuable in driving growth and increasing market share.

Incorporating free into your business strategy does come with its challenges. It requires shifting the expense of customer acquisition to the product development group. However, the benefits of acquiring a larger customer base and gaining market leadership far outweigh the costs. By offering a high-value product or service for free, you can position your company as a leader in the market and attract a larger audience.

Actionable Advice:

  • 1. Identify a high-value product or service that you can offer for free to attract customers. Make sure it is something that will truly benefit your target audience and generate positive word-of-mouth.
  • 2. Focus on building a loyal customer base rather than trying to extract maximum revenue from every customer. The long-term benefits of a larger customer base and market leadership will outweigh short-term revenue gains.
  • 3. Leverage the power of Free to drive growth and increase market share. Use the free strategy as a tool for customer acquisition and invest in product development to support this strategy.

Deep Neural Networks Help to Explain Living Brains

Deep neural networks, inspired by the neurological wiring of living brains, have become a powerful tool in understanding how our brains process information. These computational devices are designed to recognize objects in pictures, just like humans do. By studying the similarities between deep neural networks and the brain, researchers have gained insights into how our brains work.

One of the key insights from studying deep neural networks is that visual information processing in the brain is hierarchical and proceeds in stages. The earlier stages process low-level features in the visual field, such as edges, contours, colors, and shapes. Complex representations, such as whole objects and faces, emerge only later in the brain. This hierarchical processing is mirrored in deep nets, where one or more hidden layers are sandwiched between the input and output layers.

Researchers have also found that deep nets can mimic the brain's auditory and olfactory systems. By designing deep nets to classify speech, music, and simulated scents, they have discovered that the architectures of these networks parallel the brain's processing of auditory and olfactory information.

The ability of deep nets to replicate certain functions of the brain raises questions about the nature of intelligence and the limits of deep-net models. While deep nets can achieve impressive results in classification and categorization tasks, they fall short in replicating the full range of cognitive abilities exhibited by the human brain. Our brains not only categorize what's out there but also infer causal structures inherent in scenes, all in an instant.

Despite these limitations, deep neural networks offer valuable insights into how our brains process information. They provide a computational framework for understanding the hierarchical nature of visual processing and the specialization of different brain regions for specific tasks, such as recognizing faces or objects. By studying deep nets, researchers can uncover the underlying principles that govern the functioning of our brains.

Actionable Advice:

  • 1. Explore the potential of deep neural networks in your research or business. By leveraging the computational power of deep nets, you can gain insights into complex processes and improve performance in tasks related to image recognition, speech processing, and more.
  • 2. Consider the hierarchical nature of visual processing in your own work. By breaking down complex tasks into smaller, more manageable steps, you can improve efficiency and accuracy.
  • 3. Don't limit yourself to classification and categorization tasks. While deep nets excel in these areas, they may fall short in replicating the full range of cognitive abilities exhibited by the human brain. Explore the use of generative models to infer causal structures and gain a deeper understanding of the underlying mechanisms of intelligence.

In conclusion, both the power of Free for entrepreneurs and the insights gained from deep neural networks offer valuable lessons for those seeking success in their respective fields. By understanding the benefits of offering something for free, entrepreneurs can acquire customers at a low cost and build a loyal customer base. Similarly, by studying deep neural networks, researchers can uncover the hierarchical nature of information processing in the brain and gain insights into the underlying principles of intelligence. By incorporating these lessons into our strategies and practices, we can drive growth, increase market share, and gain a deeper understanding of the living brains that shape our world.

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