Perdoo, a Berlin-based OKR-focused software startup, has decided to make its basic service free, potentially shaking up its growing, and somewhat crowded, market. “Objectives and Key Results,” a planning and management technique usually shortened to “OKRs,” is a hot space for software startups, with several raising in recent months.
WorkBoard and Gtmhub, for example, each raised capital for their OKR products in the last two months. WorkBoard raised $30 million, while Gtmhub added $9 million to its coffers. So many companies are operating in the space that TechCrunch created a compendium of sorts listing the players, simply to get our mind around who is active in the space as a partial, or pure participant.
Perdoo is a different animal than its rivals. The company, instead of tapping into an obviously interested venture capital pool, is a largely bootstrapped affair, it told Inventiva. That makes its decision all the more curious. Why would a company with, theoretically, at least, less room to maneuver, make a portion of its product cost less than before? To understand, we got on the phone with Perdoo co-founder Henrik-Jan van der Pol to dig in.
Pricing
OKR software runs from cheap to expensive, with WorkBoard not listing prices on its website (that we could find while compiling this entry), to $1 per user per month for Gtmhub’s lowest-priced tier. Most providers in the space offer enterprise offerings that cost more. (Before offering a free tier, Perdoo only charged per user per month for its service, with sliding discounts for volume.)
During a call with Inventiva, van der Pol explained his company’s move to undercut other companies’ lower-cost pricing, saying that the OKR market is “still new for a lot of organizations, meaning that they don’t have a budget available.” Those players, he said, “start with spreadsheets, which creates a lot of hassle and actually decreases their chances of success.” Those firms that need tooling but didn’t have ready budget open for the cost were why Perdoo “decided to make that switch to freemium, and give people a solid and free version that they can get started with that has very few limitations,” van der Pol continued.
Free Perdoo users can track as many goals as they’d like with as many users as they’d like. According to the co-founder, his company “looked at what functionality people currently use that build their own [OKR] tools” and decided to give those away.
Perdoo isn’t insane, mind. The company is still selling a paid version of its product with more features, and the company must hope that free users convert to its paid service over time.
In a sense, the freemium move is a gambit of sorts: By offering functionality for free, perhaps Perdoo can attract to itself users that might not have otherwise selected its service (perhaps choosing a provider with more available capital for marketing expenses) — users that might convert to paying customers later on, naturally.
Money
According to van der Pol, “in order to sustain a free offer, you need to be cash flow positive and profitable,” telling Inventiva that his company is both.
Here we can see the power of not raising lots of money. Because Perdoo only raised angel money and has paid its own way since, the company can afford (literally) to offer a lot for nothing. It doesn’t have investors shouting over its shoulder about possible cannibalizing its own market, or anything similar.
So: Lots of venture dollars are powering several neat startups that are growing like mad, with WorkBoard and Gtmhub posting huge ARR gains in recent years to the tune of hundreds of percent. What impact Perdoo’s move might have on their growth, or product choices, won’t be clear for a while, if it has any at all. But Perdoo did just reprice basic OKR software to zero.
In the middle of a venture-capital powered growth war, that’s fascinating.
Source: TechCrunch
