I had the opportunity to hear Jason Fried, the founder of the project management tool Basecamp, speak this spring at Northwestern University’s Kellogg Business School Entrepreneurship Week. Jason said a number of interesting things based on his book “Rework”, but the most memorable part of his speech were his comments on “paying for services”.
I found this fascinating for two reasons: (1) Jason made it clear that when you charge for services you are held to a standard of quality and are forced to deliver a great product, especially if you have a peer utilizing a “freemium” model (giving basic services for free to subsequently sell a premium service or monetize off the user data). And (2) how it was almost identical to Raju Bhai and Saath’s philosophy of having the urban poor pay for services. At Saath, we believe that if you give a service for free, the recipient is (1) left with no stake in the quality and (2) is not motivated to consume the service. For example, let’s say someone gave you free food and it tasted terrible. If you complain, the person who gave it to you will say “how can you complain, it’s free”. Similarly, if I offer free English classes on Saturdays, no one will show up – why would anyone want to study on the weekend? But if someone is charged for it, , they will show up every Saturday to maximize the money they invested in the services. Market-based development at its best.