The freemium model is nothing new. It’s been around for a long time (think Flickr), but rarely gets much attention when the economy is doing well. Back in the first Internet boom, it was all about the numbers (user count and page impressions) and advertising was the major revenue stream. That failed. And in the last few years we’re seeing a resurgence of this old method with companies such as Facebook being valued at $15 billion with nearly $500 million invested with no proven revenue; revenue that doesn’t cover expenses, but with beloved numbers (high user count and high page impressions). (As an aside, I believe in Facebook, and while their numbers dipped in April, I think they’ll continue to grow and eventually churn out a good money making business model.)

However, Facebook is a diamond in the rough and there are far too many web companies out there trying to emulate them by growing their userbase and coming up with a business model later: Twitter comes to mind, but many larger and smaller companies as well. As I said before, there can definitely be success taking this approach, but the success rate is far smaller than simply setting up a freemium service.

If you plan to use the freemium method, you obviously need to design incentives for your free customers to upgrade, but that’s easily thought out in most cases. Simply removing advertisements for your paying customers is the simplest way, but adding additional features is the best way, in my mind. You can give certain benefits to intice people to sign up. For example, at Carbonmade we give additional projects, images, and allow people to upload video if they upgrade to our paying plan.

The freemium model is simple to employ and as your free customer base grows, so will your paying customer base. Even if a small percentage of your free customers upgrade to your paying plan (say, 1%), you’ll begin generating much needed revenue to pay your bills and do very well. Depending on the scale, but if you have 50,000 customers and 1% of them are paying at $15/month, that’s $7,500 in revenue a month, $90,000 a year. And with most Internet businesses, you’ll (hopefully) grow exponentially every month and begin seeing large returns. When coming up with your next business model, think freemium and not simply free.

The easiest example of this is by being honest and open with your customers. Customers want to be treated like mature adults; they can stomach the occasional problem(s) as long as you’re honest about the problem from the start and layout a clear path to fixing the problem.

An example of this is back in early January of this year, the hard drive on one of our storage servers became corrupt and simultaneously the backups to that server’s backup hard drive failed as well. Uh oh. We didn’t panic — okay, maybe we panicked a little bit — but within hours we not only had a blog post written explaining the situation, but also a page dedicated to the problem we termed Kaboom! with a few extra “I’m sorry” bonuses given in reconciliation to the people that lost their accounts.

We lost several thousand peoples’ data, but with quick, honest, and open communication with our customers, nearly all of them signed back up. We received less than a handful of irate complaints and dozens upon dozens of people thanking us for the way we handled things. Would it have been better if this situation never occurred in the first place? Certainly. But it can also be said that by treating our customers maturely and treating them as adults, we may have even gained more of their trust and loyalty through going through this “tragedy” together. The morale of the story is that we’re all human, and human beings respond best when treated with honesty and respect.

As we got to talking, he asked me if I had ever worked a 9 to 5. “No, I guess not,” was my response. And it got me to thinking. I’m very proud of the fact that I’ve never had to work a 9 to 5 job in my life and I hope I never have to — I prefer the 24 hours, 7 days a week, 365 days a year job. I did work a few summer jobs when I was younger (three times at a bicycle shop and two as a teaching assistant for a Yale Summer Programs class), but nothing too serious. On the one hand, I would like to know how it feels to not have any work past 5:01 PM, but on the other hand, I prefer to be able to work when inspiration hits me. Long live entrepreneurship!

Overall, I’m really happy with the class offered by instructor John F. Mahoney, CPA. He’s a great, energetic middle-aged guy who is very passionate about accounting practices. He really knows his stuff and that shines through in his teaching method, which includes a lot of his real life experience.

On to the class. We began the class by going through companies’ annual reports, analyzing business transactions (balance sheet and income statement), utilizing T accounts, trial balance, general ledger, and so forth. We continued down the path of complex accounting such as ratio analysis and ended the class with profitability, investors’ ratios, and in-depth cash flow analysis. There was a lot in-between, which I won’t mention here, but you get the general gist. My brain already feels like it’s going to explode with how much we covered.

Sometimes stretching yourself too thinly on a wide range of topics is a bad thing, but in this case I think it was good. We covered 10 chapters of our accounting book (“Financial Reporting and Analysis” by Charles H. Gibson) as well as many handouts and other things. Why I’m happy we skipped around is because I got a taste of a lot of things and I can go back and further my understanding of what’s most important to me on my own. I now know of most of what’s involved, so I can pick and choose. For example, even though we covered preferred and commons stock, that doesn’t really apply to me at this time. Hopefully, it will one day.

The bottom line (see what I did there?) is that it was really nice being able to take this class to increase my knowledge of accounting and financial statement analysis. It’s not often that at my age (24) you’re still given the opportunity to be able to go back and learn something through a teaching program while still working – unless, of course, you’re going to grad or business school. I want to thank Jason and Dave for picking up the slack while I had my head in numbers all week. They’re the best people I’ve ever worked with and you will be in awe with what we’re coming out with soon. More on that later!

Look how you can watch the progress of your upload. I love how it has two progress bars: one for the individual image and one for the total job. I equally love how it grays out finished images and adds a checkmark saying they’re finished. How cool is all that? I think Flickr is really coming along, although, I’m opposed to their recent video addition along with many other people. At least they restricted it to 90 seconds.

I really don’t know what it is about this damn train ride, which I loathe, because it’s “boring,” but maybe it’s being surrounded by working people? Maybe it’s the noise? I have no idea, but the train is a godsend to my work and I wish I could replicate the experience elsewhere. Yesterday I pumped out four pages full of concrete, usable ideas in the two hour train ride for something nterface is working on. Choo choo!